There was relief all round after Greece’s second bailout was finally rubber stamped in Brussels but immediately euro zone ministers turned their attention to Spain.
Its government was supposed to cut its deficit to 4.4 per cent of GDP this year but said it could only aim for 5.8 per cent – It was hoping ministers would cut it some slack.
Euro group Chairman Jean-Claude Juncker said in a press conference: “The euro group assesses that the timely correction of the excessive deficit should be ensured by an additional front loaded effort of the order of 0.5 per cent of GDP, beyond what has already been announced by the Spanish authorities so far.”
In other words Madrid has been told it will still have to dig deep but not quite as deep as the original target. However it will have to find another five billion euros worth of cuts – a tall order with the government’s austerity measures already unpopular and with the economy contracting.