The Spanish fiscal consolidation package announced last week is a “very important step” that should reassure financial markets, European Commissioner for Economic and Monetary affairs Olli Rehn said in a statement.
“Amounting to EUR15 billion or 1.5% of GDP, this consolidation package is sizable and a very important step to shore up public finances and reassure financial markets through measures concerning…taxes and the reform of public administration,” Rehn said in a press release late Friday. GDP is gross domestic product.
Spain’s new government said Friday the country will miss its budget-deficit target by a wide margin, and announced spending cuts and tax increases of about EUR15 billion to stem the tide.
One week after conservative Prime Minister Mariano Rajoy took his oath of office, his government said Spain’s budget deficit will be about 8% of GDP in 2011–well above the 6% target the previous government of Socialist Prime Minister Jose Luis Rodriguez Zapatero committed to.
Rehn said the “sizable fiscal slippage” was regrettable: “It is all the more important now that Spain remains fully committed to the fiscal consolidation path and stays determined to correct its excessive deficit by 2013 as scheduled,” he said.
And Rehn said the reform push mustn’t let up now: “It is crucial to keep the momentum in fiscal and economic reform to take further decisions that can help consolidation as well as bring more growth and more and better jobs in a fair way,” he said.
EasyForexNews Research Team