Brussels, 01/03/2012 (Agence Europe) - On Thursday 1 March, the Spanish minister for the economy, Luis de Guindos, indicated that the European Council would not be taking any decision on revising the Spanish budget objectives. As he arrived at the Eurogroup meeting on the Greek bailout (see other article), he explained: “We are not going to decide anything tomorrow, we are going to explain our budget policies, how last year ended. Spain is going to meet all its commitments in terms of budget adjustments, taking into account the fact that the situation has changed.” Nonetheless, he did emphasise that “the previous government had agreed to reduce the deficit to 4.4 per cent based on growth of 2.3 per cent, which is not the case today”
The Spanish government has just acknowledged that the 2011 deficit in the country overshot 8.5% with regard to GDP, although the objective of 6% had been set. It now requires a review of its budget objectives, which have become impossible, given the slippage observed and the return of the recession. The European Commission is in a difficult situation. On the one hand, it is hammering home the message that the country has to firmly apply the revised stability pact, which has only just entered into application. On the other hand, complying with Spain's request puts its credibility at risk and could provoke similar requests or illustrate different treatment between member states, whereas other countries, such as Belgium, have been obliged to further tighten their belts to bring their deficits down below the 3% threshold. The Commission is playing for time and hopes to have the Spanish draft budget available (due at the end of March) before making a decision. (MB/transl.fl)