The latest report compiled by the European Commission for Slovenia as part of the European Semester, the annual evaluation of member states's fiscal and economic policies, is quite positive.

Slovenia is in good shape; going forward, the main issues are artificial intelligence and circular economy, Katainen told a joint session of the parliamentary EU affairs and economy committees as part of his working visit to the country.

However, Katainen also said that Slovenia must undertake structural reforms to address the challenge of its ageing population. However, reform should not be the goal, the goal is a quality standard of living.

"You have to make sure that those who are able to work stay in the market for as long as necessary," Katainen said.

In his view the only way to finance the welfare state is by maximising the economy's competitiveness. And not all these policies are targeted against workers' rights, he said.

Taking questions from MPs, Katainen said that the European Fund for Strategic Investments had so far invested EUR 66m in Slovenia, but could spend much more.

Discussing the EU's next multi-year budget period, he noted the cost of Brexit and the dilemmas about border controls, the fight against terrorism, and cyber security.

The EU will not cut funding for education and research, but there will be cuts in the fields of agriculture and cohesion, MPs were told.

Katainen is in favour of creating EU Invest, a fund that would bring together all seven instruments to stimulate development of small and medium-sized enterprises. In combination with structural funds this would create an even bigger financial leverage.

The EU official also highlighted artificial intelligence and robotisation as two vital factors of growth, despite questions about their effect on the labour market. "Instead of being against, we should look at what we can do so that artificial intelligence creates new jobs."

Katainen won general approval from the MPs for saying that the rule of law should be observed or the alternative was Wild West where no rules applied. The MPs noted that Slovenia advocated the same position, including over the border arbitration dispute with Croatia.

Commenting on spreading populism in the EU, Katainen expressed concern about the current trends in member countries such as Poland and Hungary, saying that some countries "are testing the limits of our fundamental values".

When fundamental values, the rule of law and the global order are at stake, there can be no compromise, he said, adding that this was the only way for society to develop.