The European Union’s 28 member nations are required by Stability and Growth Pact to keep their budget deficits to within 3 percent of GDP. According to the European Commission forecast (as of winter 2016) six countries will exceed this level in 2016: the U.K., France, Spain, Greece, Croatia and Portugal. Romania will post a deficit at the threshold. This is an improvement from 2009 and 2010, when no fewer than 22 EU countries overstepped the deficit limit.

Path-to-Equilibrium

However, much work still needs to be done. Although deficits have been reduced all over the board, some countries consistently fail to meet their targets. Take Spain for example. Coming down from an 11.1% deficit in 2009, Spain has cut its red numbers greatly. However it has done so at a slower pace than initially estimated, missing its yearly deficit targets for several years. For instance, in 2015, Spain’s deficit was almost 1% of its GDP over its initial goal.