EU TO GIVE SPAIN ANOTHER YEAR TO REACH DEBT TARGETS
Spain will be given another year to sort out its economy
Monday July 9,2012
By Emily Fox for express.co.uk
THE EU is to give Spain an extra year to reach its debt targets in a bid to further its claim that it is no longer focusing on austerity.
EU chiefs are expected to ease a debt goal that has pressured Madrid into making cuts that are exacerbating a recession.
One EU diplomat said: “Spain’s budget consolidation targets will be adjusted to give it an extra year.”
The policy will come as another blow to Greece who have had to suffer long term austerity and have often argued that they are not receiving the same lenient measures as Spain.
Officials said the European Commission will propose a new deficit goal of 6.3 percent of economic output for this year, 4.5 percent for 2013 and 2.8 percent for 2014.
Madrid had been due to reduce its budget deficit to 3 percent of gross domestic product by the end of 2013. But a deep recession is putting that beyond reach.
While Madrid strives to cut its debts and shore up its struggling banks, it has consistently pleaded for help to get down its borrowing costs. Spanish 10-year government bond yields above seven percent are not sustainable indefinitely.
“At this moment the only institution that has enough money to act is the ECB,” Spanish Foreign Minister Jose Manuel Garcia-Margallo said at a conference.
“For that reason, the ECB should intervene in markets, it should start massive purchases of public debt so that speculators understand that they will lose their bets against the euro.”
The European Central Bank has proved markedly reluctant to revive its bond-buying programme