BRUSSELS (MNI) – New deficit cutting measures from Spain and
Portugal are welcome and will be discussed by European Union finance
ministers at their meeting May 18, European Commissioner for Economic
and Monetary Affairs Olli Rehn said on Wednesday.
Under pressure from other European Union countries, Spain and
Portugal have both said they will outline additional measures to reduce
their government debts and deficits this year and next.
European Commissioner for Economic and Monetary Affairs Olli Rehn
told reporters that the measures undertaken by Spain “seem to go in the
right direction” and that he expected an announcement from the
Portuguese government in the coming days.
On Wednesday, Spain’s Prime Minister Jose Luis Rodriguez Zapatero
announced a new set of austerity measures, which include additional
fiscal tightening of 0.5% of gross domestic product this year and 1.0%
in 2011.
“More tightening will likely come in coming years and even then we
are not sure it would be able to stabilise the debt ratio, given the
poor growth outlook and ongoing deleveraging in the private sector,”
said Giada Giani, an economist at Citigroup.
“Yet, today’s move is a positive signal in terms of the political
commitment to front-load the effort in the most unpalatable areas,”
Giani said.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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