Spain challenged by EU on budget plans

THE European Commission, on Monday October 5, has given Prime Minister Mariano Rajoy the option of making more cuts to Spain’s budget or facing a public reprimand before the December elections.

Spain will have to “take the necessary measures within the national budgetary process to ensure that the 2016 budget will be compliant with the stability and growth pact” according to European Economic Affairs CommissionerPierre Moscovici, speakingat a press conference in Luxembourg after a meeting of European finance ministers.

The Commission’s projections see Spain missing its budget deficit target by 0.3 percentage points in 2015 and 0.7 percentage points in 2016.

The Prime Minister will be issued a formal warning today, Tuesday October 6.

Rajoy’s Conservative People’s Party will have to deal with challenges from the primary opposition Socialists and the rising centre-right party Ciudadanos in the months leading up to the general election in Spain.

The economy in Spain is now growing at its fastest pace in eight years and the Prime Minister is adamant that Spain will meet its targets to reduce the budget deficit to 4.2 per cent of gross domestic product in 2015 and 2.8 per cent next year.

“For 2015 the discrepancy is very small,” Spanish Finance Minister Luis de Guindos told reporters after the meeting. “I’m convinced we’re going to meet the target and that puts us in a very good position for 2016.”