The Bank of Spain monthly report showed gross domestic product falling 0.4 per cent in the first three months of 2012, adding to a 0.3 per cent contraction in the previous quarter.
Europe’s official statistics agency confirmed Spain’s 2011 budget deficit of 8.5 per cent. The data kick-starts a Brussels review into Spain’s stringent budget targets, which some officials believe are unachievable and should be delayed or softened. The Eurostat statistics agency deficit figure does match the estimate provided by Madrid, dispelling speculation that the Spanish government of Mariano Rajoy overstated the shortfall in order to flatter its 2012 performance.
The European Commission said the figures showed there should be “no doubts” about the reliability of Spanish statistics. “There were all sorts of rumours and speculation going around saying the data had been adapted ... that has not actually been borne out.”
However, the findings will give Spanish ministers little comfort as they attempt another round of severe cuts to reduce the budget deficit from 8.5 per cent to 3 per cent of output in 2013. The measures will be on top of €27 billion that Madrid has already cut from its 2012 budget.
Spain continues to grapple with 23 per cent unemployment, and a continuing fall in property prices, which is choking the supply of bank credit as lenders are forced to provision rising amounts against bad loans.
Full article (FT subscription required)
© Financial Times
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article