3 Mar 2012

Spain to miss deficit target

10:07 am on 3 March 2012

Spain will miss its budget deficit target for this year.

Prime Minister Mariano Rajoy said on Friday Spain's deficit would be 5.8% of total economic output in 2012, higher than its agreed target of 4.4%.

He said the higher target still represented "significant austerity".

In January, Mr Rajoy outlined 8.9 billion euros ($US11.8 billion) in new budget cuts, as well as tax increases designed to raise 6.3bn euros.

But analysts said even hitting the new deficit target would not be easy.

The economy contracted in the final three months of 2011 by 0.3%

Spain has the highest jobless rate in the EU. Almost one in four people are out of work.

The BBC reports the Netherlands also said it would miss its budget target for this year, with a deficit of 4.5%. The target was 4.1%.