The European Commission thinks that the economy is improving, but it still insists that a lot of work remains. Yesterday it revised Spain's growth forecast by 1% in agreement with Rajoy's decision to double initial expectations.
Even though the worst part of the economic downturn has likely passed, Brussels wants countries to continue enacting reforms. This advice collides with statement Rajoy made in front of Congress. Talking about reforms, Rajoy said that he has "left no stone unturned." The EU estimates that Spain will exceed its deficit goal by two tenths of a point for 2013 and that a 24 billion euro cutback is necessary. This will be a tough goal to meet -- even if the economy strengthens. Ultimately, we really do need more reforms and cutbacks.
