Spain deficit may exceed 8pc – official

Julian Harris
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SPAIN’S economy minister admitted yesterday that the government’s deficit for last year could be higher than the eight per cent of GDP previously forecast.

“We’ll need to see, but it’s possible that we have gone over the eight per cent mark,” Luis de Guindos said. “Though [we] expect that it hasn’t done so by much,” the senior official added. The Spanish state has failed to match its target to keep 2011’s deficit lower than the equivalent of six per cent of GDP.

Spain’s new conservative Popular Party, elected in November, said last week that the deficit would measure around eight per cent of GDP. The party has announced renewed efforts to mend the public finances, including both tax hikes and spending cuts.

Guindos said Spain’s economy may contract in the first quarter of 2012 after shrinking in the previous three months, in line with expectations that the Eurozone’s fourth-largest economy is already in recession.