'Forget it' says Madrid on deficit cut target

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'Forget it' says Madrid on deficit cut target

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Spain is defying the EU over cutting its deficit this year.

Prime Minister Mariano Rajoy, who was in Brussels to sign the new fiscal pact, said with Spain’s economy in recession there was no way they would get the deficit down to the original target of 4.4 percent of gross domestic product. Instead it would be cut to 5.8 percent from last year’s 8.5 percent.

He blamed the previous socialist government for leaving him with a bigger than expected deficit:

Rajoy insisted his administration had respected EU norms and the stability pact and has a clear conscience.

He said:“We’ve done what is right and reasonable, even though it has meant a very big effort on our part, and what has happened is because others didn’t abide by the same guidelines.

He insisted Spain was not breaking the rules because it would reduce its deficit to three percent of GDP next year.

Brussels is not keen to cut Madrid any slack as this puts a question mark over the credibility of the European Union’s fiscal pact.

Evidence of the difficulties facing Spain’s government came in the latest jobs numbers.

The unemployment rate was 22.9 percent of the workforce in January.

The number of Spaniards filing for unemployment benefits rose during the month by over 112,000.

The total is now to around 4.7 million.

The Spanish government admits unemployment is likely to continue rising this year despite reforms intended to reverse the recession.

The employment ministry said that the total number of those claiming benefits is up by more than 400,000 from February last year.