Eurozone member states may have to make tougher cuts than they expected to ensure that they keep their budget deficits over the next few months within targets agreed at European Union level.Eurozone finance ministers piled pressure on their Spanish counterpart in a meeting in Brussels on Monday night (12 March) as they demanded a sharper reduction in the 2012 budget deficit than the country's government was planning.
However, the new figure still represents an easing of the target originally agreed with the European Commission. On 2 March, Mariano Rajoy, Spain's prime minister, came out of the European Council saying that he had unilaterally reset his country's deficit target to 5.8% of gross domestic product (GDP), far higher than the 4.4% target that had been endorsed by the Commission.
Eurozone finance ministers feared that this unilateralism risked undermining the EU's tough new ‘six-pack' economic-governance rules introduced in December, and demanded that Spain reconsider. Spain has now agreed a new target of 5.3% in light of Monday's meeting, and it is still pledging to meet its original target of 3% in 2013. Read More
