Spain's example shows limits of EU targets

That may spell trouble, says Simon Tilford at the CER. Businesses may be unwilling to invest while the outlook for demand continues to be weak, he says. Government austerity may further lower internal demand, which in turn would weigh on tax receipts and government budgets and debt levels as well as GDP. Spain relied too heavily on its construction sector to spur growth in the early 2000s, and now "they don't really have a growth strategy ... The only real way out is export-led growth, and it's far from clear how they are going to be able to generate that." He said because European countries buy mostly from each other they cannot all boost exports at the same time.