Wednesday

11th Dec 2019

Recession-marred Spain pushing for an ease in deficit targets

  • Unemployment is higher than 20 percent in Spain (Photo: xOchoa)

Faced with unpredicted recession, Spanish PM Mariano Rajoy said he will "talk to the EU commission" about easing the country's deficit target for this year.

“We’ll talk to the commission, but in any case Spain will respect its public deficit targets,” Rajoy told reporters in Rome on Thursday (23 February) when asked about an ease of the deficit target.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

He promised to draw up a "reasonable" budget for 2012 based on the "prudent" EU forecasts unveiled Thursday, which show that Spain's economy will contract by one percent of its gross domestic product instead of growing by 0.7 percent as predicted three months ago.

“This situation obliges us to be realistic,” Rajoy said. “The spending limits will be prudent, based on a prudent forecast of tax receipts. We aren’t going to say we’ll collect taxes that we don’t believe we’ll collect.”

Spain is supposed to bring down its deficit to 4.4 of GDP this year, but given the recession, the government is now trying to negotiate a five-percent target, the Financial Times reports.

Madrid already missed its deficit target in 2011, when Rajoy disclosed that it exceeded 8 percent of GDP compared to the 6 percent declared by his predecessor, Jose Luis Rodriguez Zapatero.

Recent past shows that a change of government is not seen as enough of a reason to accept an adjustment in a country's agreed targets. When Belgium finally formed a government last year it still had to pass spending cuts within a tight deadline or face severe fines.

“We will work with the Spanish authorities and decisions will be taken once we have a full picture,” said Rehn referring to when the budget is drawn up and submitted to the EU commission in March. Rehn also said that his services will examine if last year's overshoot of the deficit target was a one-off and if the blame lies with the central or regional governments.

Rajoy has already raised taxes and cut spending to reduce the deficit by about €15 billion, including education cuts which saw protests in several Spanish cities. According to Moody's, if the 4.4 percent deficit target stays the same, further cuts amounting to some €25bn would have to be enforced.

Thousands of students gathered in the eastern Spanish town of Valencia this week to protest against education cuts.
Southern euro-countries worst hit by recession

The EU economy is expected to grind to a halt in the 27 member states and to contract by an average of 0.3% in the eurozone, with recession hitting Greece, Portugal, Italy and Spain worst, fresh EU forecasts show.

Spain to test beefed-up EU budget rules

Spain is testing new EU rules on budget discipline as it seeks flexibility from Brussels on deficit targets, amid a wider debate on growth versus austerity.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Interview

EU Africa envoy: Europe needs to look beyond migration

Europe's obsession with migration from Africa means it risks losing out the continent's potential when it comes to trade, says the EU's ambassador to the African Union, Ranier Sabatucci. "Africa is a growing continent, it is the future," he says.

News in Brief

  1. Hungary asked to apologise after council leak
  2. MEPs: Finnish budget proposal 'impossible to implement'
  3. EP committee supports 'Future of EU Conference'
  4. EU survey: climate change must be parliament's priority
  5. Zahradil resigns as rapporteur on EU-Vietnam trade deal
  6. Russia plans 'Arctic Air Defence" with S-400 missiles
  7. Belgium: King does another round of consultations
  8. Thousands protest Orban's theatre clampdown

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Hungary quizzed over EU rules amid twitter row
  2. Spanish King meets party leaders to break deadlock
  3. EU alarmed by prospects of battle for Tripoli
  4. EU must manage climate and industry together
  5. Does Malta's Labour Party now belong in S&D?
  6. Green Deal targets pit Left against Right in parliament
  7. Human rights abusers to face future EU blacklists
  8. Zahradil 'conflict of interest' probe may flounder

Join EUobserver

Support quality EU news

Join us