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Spanish regional governments miss defecit targets

Wed 1st Jun 2011

Whilst the central government looks set to meet its deficit-reduction target, some of the regions are still overspending and need to take further cost-cutting measures, Economy Minister Elena Salgado said yesterday.

Central government's defict fell by 53% to 2.450 billion euros for the first 4 months of the year, equivalent to 0.22 percent of GDP. However, the combined deficit for the regions for the same period came to 4.996 billion euros, equivalent to 0.46% of GDP, compared to th target of 0.3%.

The Minister told the press that despite missing the target it is still possible for the regions as a whole to meet the deficit target for the full year of 1.3% of GDP.

The regions failed to meet last year's defecit target of 2.4% of GDP, instead coming in at 2.8%, with the biggest deviations coming form Castilla-La Mancha, Murcia, the Balearic Islands and Catalonia.

Salgado said it should not be necessary to make further austerity measures to meet the deficit-reduction target for the whole of the public administrations this year of 6% of GDP, down from 9.2% in 2010. The aim is to ultimately trim the shortfall to target set by the EU of 3% by 2013.

Data released yesterday by the National Statistics Institute (INE) revealed how public spending on research and development in Spain fell 0.9% in 2010, the first contraction in 14 years.

Elsewhere, the EU commissioner for competition, Spain's own Joaquín Almunia, suggested that the regions should be subject to a "legally binding" cap on spending to ensure deficit reduction targets are met, an option the central government has been reluctant to consider.

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