Cut it out

20 August 2010 By Fiona Maharg-Bravo

The government appears to be slightly backpedalling on its austerity measures. Despite successful recent debt auctions, this seems naïve. Investors are still nervous of sovereign risk, and Spain cannot afford too many missteps.

This content is for Subscribers only

Context News

Spain announced on Aug. 18 that it would cut public works spending by 500 million euros less than expected in 2011. Elena Salgado, finance minister, made the announcement in Madrid at a joint news conference with José Blanco, the public works minister.
Salgado justified the move by pointing out that state borrowing costs were lower than forecast. She reiterated Spain's commitment to meeting its budget targets, with the deficit expected to fall from 11.2 percent of GDP in 2009 to 9.3 percent this year, 6 percent in 2011 and 3 percent in 2013.

Salgado also said the current structure was sufficient to meet those targets contradicting earlier suggestions by Blanco that the government would hike taxes.

Email a friend

Please complete the form below.

Required fields *