Spain’s ruling conservative party announced a series of budget policies on Friday that are meant to placate the European Commission and expected to pass parliament with the support of the opposition Socialists.
Economy Minister Luis de Guindos told reporters the government that came to power in October had agreed to reduce the deficit by another €16 billion, mostly by raising taxes. The extra austerity measures should bring the shortfall down to 3.1 percent of gross domestic product in 2017.
Spain has consistently missed its fiscal targets since the start of the European debt crisis. The European Commission has always issued stern statements but never used its power to fine Madrid.
Most recently, the EU executive lamented that Spain had failed to take “effective action” to bring its deficit under the 3-percent deficit ceiling. Yet it balked at imposing a penalty of .2 percent of national economic output, or €2 billion. (more…)