Thursday, January 12, 2012

Spain Warns Deficit Could Grow

Spain warned Monday that the government's deficit for last year could be even higher than it predicted just days ago.

Spain's new conservative government last week projected the 2011 deficit at 8 percent of the country's annual output of goods and services. But Monday, Finance Minister Luis de Guindos said the deficit could be even bigger.

His assessment came as the government said that later this week it would unveil new austerity measures on top of the more than $19 billion in tax increases and spending cuts it had already announced. Guindos said the government will promote a "very aggressive reformist agenda" over the next several weeks.

One financial investment manager, Pascal Bernachon, said Europe's governmental debt crisis remains unresolved as the new year starts.

"The problems of the eurozone remain identical [to last year's]. Spain dampened the mood last week with its announcement that it could not meet its targets on the deficit, so because of that it has had to create more austerity measures," said Bernachon. "So, going into 2012 the European zone uncertainties remain and it's necessary to resolve these problems and reduce the deficits." Read More