Spanish Prime Minister Mariano Rajoy said there is a case for easing budget deficit targets set by the European Union, as the recession undermines tax revenue.
Rajoy’s comments undercut Budget Minister Cristobal Montoro’s insistence that Spain can stick to the path of budget consolidation demanded by the EU even after the Bank of Spain said the euro area’s fourth-largest economy contracted for a fifth quarter between July and October.
“In 2012, we definitively will comply with our target”, Montoro said as he presented the 2013 budget to the Parliament in Madrid. The EU has set Spain a goal of 6.3 per cent of gross domestic product this year, after overspending amounted to 9.4 per cent last year, as much as Greece and the second-highest shortfall behind Ireland.
Economy Minister Luis de Guindos meanwhile said Spain’s access to funding has improved. “We are starting to see foreign investors coming back to back Spanish debt purchases”, he said. “That is fundamentally due to two reasons: because the government is doing what it has to do, and because we are all acting to dissipate doubts on the euro’s future.”
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