Prime Minister Mariano Rajoy has said that Spain's regions agreed to spending cuts aimed at bringing down the country's deficit in line with EU rules by 2014.
With all 17 regional leaders pledging to stick to EU's target of a 3 per cent deficit by 2014, Rajoy said he is happy to "give a good message" to markets. The meeting came after several regional leaders had publicly questioned the extra austerity measures agreed by the central government and amid mass anti-austerity protests, parts of which turned violent. Five regions have asked for aid from an €18 billion national bailout fund.
A growing separatist movement in Catalonia - the country's biggest regional economy, where elections are due next month - has also added tension to the Spanish political scene. The country's regions are responsible for a third of national spending and have been blamed for messy balance sheets which led to a bloated budget deficit of 9 per cent of GDP last year.
For this year, the government has recently predicted the deficit will be 7.4 per cent - an increase of over 1 per cent compared to what it agreed with the European Commission in spring.
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