21.08.2012
By Simon Miller
Spanish regions are the biggest threat to the country’s austerity programme according to a study by the Foundation for Applied Economic Studies (FEDEA).
With Spain looking to lower the public deficit from 8.9% to 6.3% this year, the 17 regions were set to break their agreed limits.
The central government had limited the regions to a public deficit of 1.5% of GDP but the FEDEA report said that is the regions implemented their announced merasures in their economic and financial plans, their deficit would be 2.2% of GDP.
The report added: “"If the regions do not implement the announced measures and maintain the pace of spending in the first quarter, their deficit would slide to 4.0% of GDP, or 2.5 percentage points over target.”
Despite the tough talk from the central government, regions led by Catalonia and Andalusia have begun to resist austerity measures imposed by Madrid.
The FEDEA study said regions faced a tough task reaching their 2012 target having finished the previous year with a deficit equal to 3.34% of GDP, which accounted for 70% of the nation's deficit overrun.
The foundation said there was reason for serious doubt about the regions' respect for their austerity plans, and this was the "principal threat" to the national deficit-cutting goal in 2012.
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