Bloomberg News

Luxembourg, Spain Clash on Easing EU Budget Deficit Rules

March 01, 2012

Luxembourg Finance Minister Luc Frieden said the European Union won’t relax budget deficit rules to give Spain breathing room even as the nation’s economy minister said its target for 2012 is outdated.

“The rules are the same for everyone,” Frieden told reporters in Brussels today before euro-area finance chiefs met in Brussels. “Rules don’t get relaxed.”

The region’s ministers “understand perfectly that the circumstances that led us to the 4.4 percent are no longer in place at the moment,” Spanish Economy Minister Luis de Guindos told reporters separately after the meeting.

Spain is pushing the EU to review stability programs to take into account recession forecasts after it missed last year’s budget goal. Prime Minister Mariano Rajoy has said the 2012 target will be even more difficult to meet as the economy shrinks.

Spain’s stability program approved by the EU sets a target of 4.4 percent this year. That compares with an 8.5 percent shortfall last year, above its 6 percent goal.

“We did not have any discussions on concrete numbers” for Spain, De Guindos said.

Rating company Fitch Ratings today said a 4.4 percent deficit for 2012 is “unrealistic” as last year’s slippage indicates it will take longer to reduce the deficit than previously assumed. A higher target would be “desirable” and won’t necessarily impact Spain’s debt rating, Fitch said in a statement.

To contact the reporters on this story: Josiane Kremer in Brussels at jkremer4@bloomberg.net; Angeline Benoit in Madrid at abenoit4@bloomberg.net; Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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