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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.