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Guess which countries made it onto the EU's naughty list

A woman carries a shopping bag in Madrid on Wednesday. The European Commission is warning that Spain and Slovenia face "excessive" problems balancing their economies. (AP Photo/Paul White)

In an effort to flag disastrous economic situations before they spin out of control, the European Commission has produced a list of top countries to watch.

The commission fired off an indepth communication to its member states on Tuesday, concerning the "prevention and correction of macroeconomic imbalances" about 13 countries.  In other words, the commisson is saying "pull-up your socks" because we have analyzed your broad economic structure, behaviour and decision making and we've found some problems.

"In the decade leading up to the outbreak of the crisis, not enough attention was paid at the EU level to developments in the economies of individual member states," the report noted. "This was due in part to an insufficient recognition of the spillover effects of economic policies pursued in one member state on the economies of other member states ..."

On the list is Belgium, Bulgaria, Denmark, Spain, France, Italy, Hungary, Malta, the Netherlands, Finland, Slovenia, Sweden and the United Kingdom.

Spain and Slovenia are at the top of the naughty list. 

Spain is "experiencing excessive macroeconomic imbalances. Although adjustment is taking place, the magnitude of the necessary correction requires continuous strong policy action."  The report noted very high domestic and external debt levels pose great risks for growth and financial stability.

But the most dire warnining is directed at Slovenia, the small country south of Austria, that was one of the first post-communist states to join the EU. Many are warning Slovenia could be the next country to ask for a bailout from European lenders, however, the country maintains it is managing just fine.

The report said, Slovenia is "experiencing excessive microeconomic imbalances. Urgent policy action is needed to halt the rapid build-up of these imbalances and to manage their unwinding."

Periods of policy uncertainty and legal obstacles to reforms have prevented the country from correcting its problems, the commission said. Companies are "still unsustainably over-indebted" and there is a rise in "non-performing loans."

Be warned, 13. The commission is watching.

Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga




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