Spanish Business News

MADRID — Spain's public deficit for 2010 will be "somewhat better" than the government's target of 9.3 percent of annual economic output, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

Spain will also meet its 2011 target for a public deficit equivalent to 6.0 percent of gross domestic product, Zapatero said during an interview with Onda Cero radio.

"Of course we will meet the deficit target of 6.0 percent in 2011, just as we set the goal of reducing the deficit in 2010 to 9.3 percent and today I can say that we are going to be somewhat better than the objective we set," he said.

Spain's public deficit hit 11.1 percent of GDP in 2009, the third-highest in the eurozone after Greece and Ireland, but the government has vowed to bring it down to the eurozone limit of 3.0 percent by 2013.

Investors have shown deep concern over the annual deficit being racked up by the Spanish government, fearing the country may need a Greek or Irish-style bailout by the European Union.

An economic and financial rescue for Spain would be far bigger than anything seen to date in Europe: the size of its economy is twice that of Greece, Ireland and Portugal combined.

To reduce the deficit, Zapatero's Socialist government has pushed through unpopular austerity measures, despite stagnant growth and an unemployment rate of around 20 percent, the highest in the European Union.

The measures include higher sales taxes, a freeze on old age pensions and an average cut to public workers' wages of five percent.

Last month parliament narrowly approved the government's austerity measures for 2011 which cut expenditure for this year by 7.9 percent to 122 billion euros (170 billion dollars).

Source: AFP