STOCK MARKET WATCH -- Thursday, 30 May 2013

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26. Brussels eases Spain’s deficit target for this year to 6.5 percent of GDP

http://elpais.com/elpais/2013/05/29/inenglish/1369834893_547583.html

The European Commission on Wednesday confirmed that Spain will be given more time to reach its deficit-reduction targets as a result of the weak state of the economy.

The goal for this year was set at 6.5 percent of GDP, compared with the figure of 6.3 percent requested by the conservative government of Prime Minister Mariano Rajoy. The initial target was 4.5 percent of GDP, down from 7.0 percent in 2012, excluding the 40-billion-euro European bailout to recapitalize Spanish banks.

Spain was also given another two years to bring the budget deficit back within the European Union ceiling of three percent of GDP. The administration now has until 2016 to do so, when the shortfall is expected to be 2.8 percent of GDP. This will be achieved progressively with the goal for 2014 set at 5.8 percent of GDP and at 4.2 percent in 2015.

The concessions reflect the deterioration in economic activity and the fact the government had complied with the structural adjustments demanded of it for last year.