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EU warns France and Spain on deficits, clears Portugal

The EU on Monday kept France and Spain on notice for excessive public spending, but absolved bailed-out Portugal after it stayed within the bloc’s deficit limit for the first time since 2007.

The European Commission, giving its opinions as part of its annual assessment of EU national budgets, also singled out Italy for running a worryingly high public debt.

It said Portugal had left the commission’s so-called excessive deficit procedure, becoming the first bailed-out nation from the eurozone debt crisis to fall back into the bloc’s economic good graces.

For Portugal “this is extremely good news,” EU Economy Commissioner Pierre Moscovici told a press conference.

The commission said that Portugal’s deficit fell to 2.0 percent of annual output in 2016, well clear of the EU’s limit of 3.0 percent.

But France and Spain are recurring EU rule-breakers when it comes to running deficits.

Freshly-elected French President Emmanuel Macron has vowed to reduce public overspending with tough reforms and spending cuts. The deficit in France hit 3.4 percent last year.

Spain, which suffered a major real estate crash in the worst of the debt crisis, saw its deficit land at 4.5 percent of output last year, one of the highest in the EU.

Italy, with an accumulated debt of 133 percent of gross domestic product in 2016, was in major breach EU rules which limit debt to 60 percent of GDP.