Macro-economic report. Annual growth survey 2011 annex 2.

Abstract

Member States' actions in 2011-2012 will be critical in averting a "lost-decade scenario". Policy priorities, timing and content will have to be set according to national circumstances and reflect inter alia the risks to fiscal sustainability and the need to correct excessive imbalances. The most urgent task is to break the vicious circle at work in some Member States of unsustainable debt, financial market disruption and low economic growth. While the draft National Reform Programmes submitted in November acknowledge the urgency of addressing the macro-economic challenges in an integrated way, they often fall short of proposing adequate policy responses. This supporting document therefore aims at pinpointing measures that have the highest potential of delivering positive macro-economic effects and that Member States could consider implementing in the coming two year. The first section sets the scene by looking at the imbalances and weaknesses that had emerged before the crisis and at the legacy of the worst economic crisis since the Great Depression in the 1930s. The second section focuses on the need to set public finances back on track. The third section makes the case for healing the financial sector swiftly. The last section highlights the urgency of structural reforms to correct macroeconomic imbalances and to fix the ailing growth drivers.