EU's Rehn demands Spain meet 2012 deficit target
(BRUSSELS) - EU economic affairs commissioner Olli Rehn on Tuesday told Spain it must meet its existing target for its 2012 public deficit, despite the figure for 2011 likely coming in higher than expected.
"It is essential that sustainability of public finances be restored without delay and therefore our view is that it is essential to to meet the fiscal targets for 2012," Rehn said, referring to a targeted shortfall of 4.4 percent of gross domestic product (GDP).
Rehn described as "regrettable" expected confirmation from Madrid that the gap in its public finances last year will be "significantly higher" than anticipated, at around 8.0 percent of GDP, way above the 6.0-percent initially agreed.
In a bid to meet its 2012 target, the right-leaning government has since raised taxes and slashed spending.
But in an interview on Sunday, Spanish Finance Minister Cristobal Montoro asked that the 4.4-percent target be eased, arguing that it was based on out-dated growth projections.
On Monday, Spain's central bank forecast that the country will fall back into recession this year with a contraction of 1.5 percent, fuelling concerns over the country's ability to rein in its debt.
Rehn urged the government in Madrid to "substantiate" or spell out exactly how it expects to to restore fiscal sustainability, to "move quickly" in preparing the 2012 budget and also to detail a planned shake-up of the country's rigid labour laws.
"If Spain commits itself and sticks to its plan, it wont need any help from Europe," said Spanish economy minister Luis de Guindos at the talks, adding further reforms are also planned dealing with its banks.
The Spanish unemployment rate is predicted to rise to 23.4 percent this year.
Spain emerged only at the start of 2010 from an 18-month recession, triggered by the global financial crisis and a property bubble collapse, which led the jobless rate to balloon to 21.5 percent in the third quarter of 2011, the highest level in the industrial world.