Spain told it can’t delay deficit cuts

SPAIN will not be allowed any more time to cut its budget deficit, the European Commission said yesterday.

Budget minister Cristóbal Montoro called for the EU to give the country extra leeway on deficit targets this year on the basis that the economy is suffering another recession.

However commissioners yesterday insisted Spain will not be cut any slack.

“This is a crisis of confidence. To get through, it is vital to restore finances without delay,” said Ollie Rehn.

Meanwhile, mortgage lending has plummeted as the economy contracts. Demonstrating just how deep Spain’s crisis is, data out yesterday showed mortgage lending fell 38.7 per cent by value in November, compared with the same month of 2010.

But the government did successfully sell short-term debt at reduced yields yesterday. Investors flocked to a sale of short-term debt, buying €2.51bn (£2.09bn) of debt at 1.285 per cent on three-month bills – the lowest interest rate since last February – and 1.847 per cent on six-month debt.