High public and private debt levels are among the issues which require decisive policy action and specific monitoring in Ireland, according to the European Commission.

The commission has decided 16 member states, including Ireland, are facing what it called "macroeconomic imbalances".

The new college of EU commissioners, including Ireland's Phil Hogan, have sent what they call a "strong signal" to member states to carry out structural reforms and continue to consolidate their public finances.

France and Germany have also been identified as having macroeconomic imbalances.

In Ireland's case that translates as high levels of public and private debt, ongoing issues within the banking sector, in particular continuing losses, and high levels of unemployment.

The commission has a six-step imbalance procedure by which it grades the severity of the macroeconomic issues facing each country, with one being the lowest and six the highest level on the scale.

Ireland is currently at four, which is down from six over the past two years.

The commission is more concerned with Italy and France, far larger economies, which are judged by the EU to be facing excessive imbalances.

Minister of State at the Department of Finance Simon Harris has said the issues raised in the latest review are valid.

Mr Harris said the Government was extremely aware of the fact that economic recovery is fragile and that there is an awful lot more to do.

However, he said yesterday’s job figures and the fact that unemployment is set to drop below 10% in the first half of this year showed the distance the country has travelled.

But he added that economic stability cannot be taken for granted and that what could contribute to economic instability was political instability.

This is why the Government was asking people to stay the course, he said.

Mr Harris said there was no one more aware of the fragility of the economy than the Government.

Taoiseach Enda Kenny said there is nothing new in the latest European Commission review of Ireland.

Mr Kenny said the government had been up front about the fact that our recovery was fragile and incomplete and needed to be managed prudently.

He said the Government were not going to go off the rails and that the report speaks for itself.