Monday, January 2, 2012

Spain public deficit may top 8 percent: minister

Spain's public deficit for 2011 may be higher than the 8 percent of GDP forecast by the new government, the economy minister said Monday, fuelling fears the country faces a prolonged period of tight budgets and economic contraction.

Spain had originally targeted a 2011 deficit of 6 percent of gross domestic product, but the newly elected conservatives said Friday the deficit would be 8 percent. It said it would now have to work hard to hit this year's tough deficit-reduction goals in an economy seen tipping back into recession this quarter and announced new tax rises and spending cuts.

"We'll need to see, but it's possible that we have gone over the 8 percent mark, though (we) expect that it hasn't done so by much," Economy Minister Luis de Guindos said during an interview with Cadena Ser radio, his first since taking the post after the conservatives won the November election. Read More