Spain urged to fast-track budget cuts
By Sarah Collins | Monday 02 April 2012
Spain has been urged to enact emergency legislation to push through a €27 billion austerity plan after EU ministers tentatively welcomed the plan at a meeting in Copenhagen, on 31 March. The European Commission and European Central Bank (ECB) both urged Madrid to make good on the reforms, which include a more than 50% cut in the foreign affairs budget, as well as massive cuts to tourism, public administration and education. “It would be preferable if the new measures can be enacted as soon as possible through emergency legislation and not waiting for the standard legislative procedure that can take until June,” said (ECB) Vice-President Vítor Constancio after Spain unveiled the 2012 budget, on 30 March.
Spain is bound to reduce its deficit by 2.5 points of to 5.3% of GDP to meet a Commission approved budget target this year. It has to bring last year’s 8.5% deficit - which was above target - down below 3% by the end of 2013. “The unambiguous commitment of the Spanish government to the target of a 3% fiscal deficit in 2013 is indeed of paramount importance,” Economic Affairs Commissioner Olli Rehn said. “Spain is showing determination in its fiscal and structural policies,” Rehn added. However, both he and Constancio said Spain needed to provide more information on how it would cut spending in the regions, which are said to be largely responsible for Spain missing its deficit target last year.
The Spanish budget came the same day as eurozone leaders agreed to up their emergency lending ceiling to €700 billion and following the resurfacing of market pressure on government borrowing costs. Costs had fallen in response to the ECB’s recenttrillion euro three-year loans for banks.