Cyprus economy at high risk, says EU Commission

The European Commission has warned member states about a worsening budget deficit and debt, combined with the growing number of elderly people, urging them to take measures.

The warning came in a report, which notes also that Cyprus’ economy is included in a list of thirteen countries at 'high risk', together with Greece.

The Commission reports that Greece, together with Ireland, Spain, Slovenia and the UK face sustainability gaps of the public finances above 12% of GDP. The report indicates that closing their gaps will require both ambitious consolidation programmes that reduce debts and deficits in the coming years, and profound reforms of social protection.

The sustainability gaps of Cyprus, the Czech Republic, Latvia, Lithuania, Malta, the Netherlands, Romania and Slovakia are about 6% percent of GDP;

According to the Commission, the economic growth for the next years will not by itself lead to consolidation of public finances of member states, because Europe is facing the problem of aging population.

The Commission recommends to EU countries to reduce deficit and debt, increase employment rates and reform social welfare systems, to deal with changing demographics.

Bulgaria, Denmark, Estonia, Finland and Sweden are facing the lower risk because they have relatively stronger budgetary positions and have undertaken comprehensive pension reforms in recent years. The budgetary positions of Belgium, Germany and Austria are reported to be “relatively sound”, provided that the crisis-related deterioration in government accounts does not become structural.