BRUSSELS – Finance ministers of the European Union (EU) will give Spain until 2014, to reach its deficit target of 3% of GDP, three EU diplomats said Monday, before a meeting of ministers on Tuesday, which they will make the decision.
“The objectives of fiscal consolidation in Spain will be adjusted to give an extra year,” said one of the diplomats.
“It is a unilateral move. Spain needs to make the necessary cuts to achieve that goal and that will be discussed on Tuesday at the Ecofin (meeting of finance ministers from the EU),” he said.
Two other diplomats said that Spain would receive additional time to achieve their objectives in return for more action to save.
Under the rules of the EU, Spain has to reduce its budget deficit to 3% of GDP by 2013, but a deep recession and the bursting of the housing bubble make it a difficult challenge.