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Spain handed new deficit target

Spain handed new deficit target
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EU finance ministers meeting in Brussels have cut some slack for Spain, handing the country a new deficit target for this year.

The aim is 5.3% of GDP. The new figure comes after Madrid admitted it could not cut its deficit to the EU agreed 4.4%.

“The target is unchanged for 2013 for Spain. What is true for Spain is true for all other countries, we are to restore confidence in the euro area, we’re underway in putting in place systems to reduce the deficit,” explained Francois Baroin, French Finance Minister.

Ministers have called on Mariano Rajoy’s government to make fresh cuts in the country’s bid to make the new deficit goal.

The meeting also backed Greece’s second bailout of 130 billion euros pending a contribution from the International Monetary Fund.

But the EU remains split on the introduction of a financial transactions tax with the Swedish Finance Minister, Anders Borg against the move. “It would increase house lending costs, increase costs of capital for companies, increase costs for government. So that is a proposal that is not good for European growth,” he said.

Our correspondent, Natalia Richardson-Vikulina said: “The idea of a financial transactions tax was born 40 years ago. But the EU wants to introduce the tax now since it is actively looking for money to resolve the crisis, the EU also thinks that the financial industry is currently under-taxed in relation to other sectors”.

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