Brussels has warned Spain and Slovenia to take urgent steps to address their deepening economic problems or face a fine at the end of the month. Under the current rules, the EU can punish countries that do not correct excessive imbalances with a fine of 0.1% of their GDP.
The warning came after the European Commission unveiled on Wednesday its second review of economic imbalances in 13 EU countries.
‘In Spain, despite significant progress in 2012, there are still excessive macroeconomic imbalances. Spain should therefore maintain the reform momentum by including comprehensive and concrete policy measures in its forthcoming Stability and reform Programmes in the coming weeks by the end of April’, said EU commissioner for Economic and Monetary Affairs Olli Rehn.
According to the Commissioner, unemployment in Spain is likely to reach 27% this year.
Rehn said that very high domestic and external debt levels are threatening growth and financial stability in the country. Madrid recently asked for a €40 billion EU bailout to deal with its troubled banking system.
Brussels also urged the Slovenian government to tackle the problems its banking sector is facing. Slovenia is widely seen as the next eurozone member that might need an EU bailout.
‘In Slovenia, while in a still manageable position, excessive macroeconomic imbalances are quickly building up. In order to halt and reverse this negative trend, Slovenia needs now to proceed swiftly and decisively. It should complete the reforms it has started and include comprehensive and concrete policy measures in its forthcoming National Reform Programme and Stability Programme to be presented to the Commission in the coming weeks’, said EU commissioner for Economic and Monetary Affairs Olli Rehn.
But the new Slovenian prime minister, Alenka Bratusek, insisted on Tuesday that her government will not need EU aid.
‘In the recent days, there has been a lot of media pressure on Slovenia. I would like to state that we are not a tax haven, we are export oriented. We are one of the countries with the least leverage in the EU, far below the EU average, our unemployment is lower than the EU average and they have a positive balance sheet total. The new government is determined to do everything in its power to solve their problems ourselves’, said Slovenia’s Prime Minister Alenka Bratušek.
The Commission report shows that France and Italy have also growing signs of economic imbalance, a cause for concern.