BRUSSELS (AP) â¿¿ The European Commission turned up the heat on Spain and Slovenia Wednesday, warning that the two struggling countries are facing "excessive" problems fixing their economies. Meanwhile, France's government came under pressure to get its debt under control.
In its health-check of European Union countries with debt and deficit problems, the Commission singled out Spain and Slovenia as countries where swift action was needed. Both countries have been hit by recession, high unemployment and ailing financial sectors.
The Commission's report recommended that the two countries must both move swiftly to fix their ailing banking sectors â¿¿ either through recapitalizing or winding down some banks â¿¿ and further reform their economies to ensure a path toward sustainable growth.
As well as being the EU's executive branch in Brussels, the Commission is also the 27-country bloc's economic watchdog, with the power to identify and pressure countries with vulnerable economies into taking action.Unveiling the Commission's finding, Olli Rehn, the EU's top economic official, said that Spain must maintain the reform momentum since country faces "formidable challenges." The report added that "high domestic and external debt levels continue to pose serious risks for growth and financial stability" in Spain. Spain, the EU's fifth-largest economy with a 1.04 trillion euro annual gross domestic product, is in its 18th month of recession with an unemployment rate of more than 26 percent. The country's problems stem from its banking industry, which has been struggling under toxic property loans and assets since Spain's property bubble collapsed in 2008. Spain has already received 40 billion euros in loans from the European Union for its financial sector on the condition that it overhaul its banking sector. The country's government has also embarked on a program of harsh austerity measures to bring its deficit down from almost 7 percent of annual GDP, way above the EU target of 3 percent.