Skip to comments.EU Commission pressures Spain on budget
Posted on 02/29/2012 4:06:40 AM PST by DeaconBenjamin
Spain must explain soon to the European Commission why its 2011 budget deficit was substantially higher than expected and deliver clear future budget plans, the Commission said on Tuesday.
Spain's 2011 budget deficit came to 8.51 percent of GDP, the finance minister said on Monday, up from early estimates of 8.2 percent and far above forecasts from the Commission for something nearer 6.5 percent.
Spain, which has enacted austerity measures and economic reforms to avoid being sucked into the euro zone debt crisis, presents on Friday its 2012 spending ceiling, a key element in the budget for the year.
A government official said Madrid could soon agree on a new deficit target that it can take into account before completing the new budget, which it plans to present on March 30.
"The logic of these things means that the institutions of the European Community and the Spanish government will reach an agreement, which will be reflected in this year's budget," Antonio Beteta, secretary of state for public administrations, a division of the finance ministry, told RNE radio on Tuesday.
A Spanish government spokeswoman declined to confirm that Madrid was hoping for a relaxation of its current target of a deficit of 4.4 percent of gross domestic product.
Spain will have to come up with more than 40 billion euros in savings to meet that target, implying spending cuts that most economists see as impossible given that the economy is already slipping into recession and the jobless rate is the highest in the European Union at 23 percent.
EU Economic and Monetary Affairs Commissioner Olli Rehn also reiterated on Tuesday that the Commission would not begin to explore a new target for Spain until the country has presented a budget based on the current objective for deficit reduction.
(Excerpt) Read more at reuters.com ...
Conditions in Spain have deteriorated at a rapid pace. As little as a few months ago the Spanish economy was foolishly projected to grow at .7%. Now it expected to contract 1%.
Likewise, Spain's budget deficit was supposed to shrink to 6% in 2011 and 4.4% in 2012. Instead it rose to 8.51 percent in 2011, up from a revised estimate of 8.2% which was up from a revised estimate of 6.5%.
I think you can see a clear pattern here and as a result, the EU Commission Pressures Spain for Explanations.
Sharpen the Mower
My friend Bran notes that Spain now needs to come up with another 30 billion Euros in budget cuts on top of the 15 billion promised. Moreover, those cuts need to be spread out over 9 months, not 12.