Ministers insist Spain will not need more cuts

SPANISH ministers said yesterday that the government will not need new austerity measures this year after its public deficit beat forecasts of a deeper effect from prolonged recession.

The deficit was 6.7 per cent of GDP in 2012, the government said, missing a goal of 6.3 per cent but below European Commission and economists’ forecasts of seven per cent or higher.

“I insist that what we achieved is really big, important, really notable and it will help Spain and its regional governments recover their credibility,” treasury minister Cristobal Montoro said.

The result was surprising given Spain’s ongoing battle with recession, as separate data showed that GDP fell a further 0.8 per cent in the fourth quarter of last year, capping off a 1.4 per cent output slump over the whole of 2012.

Meanwhile, elsewhere in the Eurozone official figures showed French household consumption dived 0.8 per cent in January, driven by an 11.7 per cent plunge in car sales after pollution penalties were hiked from 1 January.

And a separate release from Insee, the body that produces official French data, revealed that prices of existing properties fell 1.7 per cent.

However, German strength contrasted with difficulties across the rest of the currency bloc. German employment fell 391,000 between December 2012 and January 2013, data revealed, but this appeared to be mainly due to seasonal variations.

Over the year, employment was up 238,000, from 41.2m to 41.4m, the figures from Destatis showed. Looking over the same period, unemployment was down around 160,000, from 2.66m in January 2012 to 2.5m in the same month this year. This meant the rate was down to 5.3 per cent, from 5.6 per cent a year earlier.