The European Union warns of a "job-anaemic recovery" in Sweden.

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• Europe hammers deficit bingers
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The European Union slammed overly "optimistic" growth assumptions masking bloated national budgets in a report Wednesday. Forecasts and promises given by "a majority" of 14 nations whose deficits are causing concern in Brussels were seen as likely to fall short, including Sweden's.

The Commission said that Sweden will need to "avoid that a potentially rather job-anaemic recovery leads to permanently higher long-term unemployment and a permanent loss of labour supply".

Still, it praising the fact that "large surpluses in good times allowed fiscal policy to play an active role in the downturn."

Sweden's economy last year suffered its largest annual setback in more than half a century as gross domestic product dropped 4.9 percent compared to 2008, which is the largest annual fall since World War II.

Central bank governor Stefan Ingves said just two weeks ago that “the economic recovery is now resting on more solid ground” and echoed the Riksbank’s intentions to hike its key interest rate this summer.

Swedish central government finances will recover somewhat more quickly as the labour market downturn will be less sharp than expected, the Debt Office forecast.

But Sweden's deficit is expected by the Commission to swell to 3.4 percent this year, above the allowed level of 3 percent, due to expansionary fiscal policy.

The Commission warned about the challenge for Swedish policy makers to carefully calibrate the withdrawal of stimulus measures "so as to neither nip the recovery in the bud nor contribute to the build-up of potentially destabilising household-sector imbalances".

"Sweden is invited to ensure that the breach of the 3 percent deficit reference value in 2010 remains contained and temporary and to stand ready to adopt timely discretionary consolidation measures should budgetary outcomes fall short of expectations," the Commission says.

However, the Commission's most forthright criticism was reserved for the UK. Read more about the European deficit bingers here. Full statement on each country here.