Brussels, 14/11/2012 (Agence Europe) - On Wednesday 14 November, the Commissioner for the euro, Olli Rehn, said that Spain had adopted “sizeable measures of fiscal consolidation to restore confidence to its public finances”. These measures equate to “5.2% of the GDP” of Spain for 2012 and “2.25% of GDP” for 2013, he added, explaining that in structural terms (in other words, not taking account of market conditions), the effort undertaken corresponds to the specific budgetary recommendations made by the European Council. As a result, the Commissioner added, “no further steps in the excessive deficit procedure of Spain are needed at present” for either 2012 or 2013. The European Commission will submit its communication to the ECOFIN Council for debate.
Rehn promised that he would keep a close eye on the development of the budgetary and macroeconomic situation in Spain. The Commission notes the existence of “risks” in the respect of Spanish budgetary objectives in nominal terms for 2013, due, amongst other things, to the “optimistic” economic forecasts taken by Mariano Rajoy's government as a basis for its calculations. Flagging up “risks of more budgetary slippages in the Autonomous Communities”, Rehn stressed the importance for Madrid of applying to the letter the finance law limiting regional expenditure.
According to the Commission's autumn economic forecasts (see EUROPE 10725), Spain is still in the grip of recession: a drop of 1.4% in GDP in 2012 and 2013. Economic recovery is expected to return in 2014 (+0.8% of GDP). In nominal terms and assuming unchanged policies, Spanish public deficit would reach 6.4% of GDP in 2014, a level well above the threshold of 3%. Lastly, Rehn reiterated that it would be up to Spain alone to decide whether to make a global bailout request of the Eurozone. The Commission is to stand ready if needs be. (MB/transl.fl)