Spain has to cut deficit in 2016, Moscovici says
BRUSSELS (Reuters) - Spain's next government must ensure its budget deficit is reduced this year in line with European Union rules, the EU's Economics Commissioner Pierre Moscovici said on Thursday.
Talks to break the political deadlock that followed a December election in which all four main political parties fell short of a majority are continuing, with the Socialists now leading efforts to form a coalition. Their chances of securing enough support are seen as slim, however, even with backing from anti-austerity party Podemos.
Formerly the main opposition party, the Socialists said in campaigning that if elected they would ask Brussels to relax deficit targets.
Asked about the Spanish budget in a news conference in Brussels, Moscovici said that in order to stay in line with the rules, the deadline had to be respected.
Spain was required to bring its deficit below the EU's ceiling of 3 percent of gross domestic product in 2016, but the Commission's latest forecasts released on Thursday pointed to a deficit of 3.6 percent this year.
The 2015 deficit was projected at 4.8 percent, well in excess of the 4.2 percent target set by the Commission.
Spain's acting Economy Minister Luis de Guindos said it was too early to assess whether the 2015 goal would be missed, adding that the main uncertainty was the country's autonomous regions, which have overspent in recent years.
"The risk that the Spanish economy could pose for the euro zone at the moment does not come from whether or not the public deficit goal will be missed by a few percentage points," De Guindos told journalists in Madrid.
"The risk is that we should have a major slowdown (in the economy), which would cause problems for fiscal policy and for the euro zone as a whole."
De Guindos insisted there were no signs of any impact on the Spanish economy so far from the political impasse, adding that output was expanding steadily and could match the 0.8 percent quarterly growth rate reached in the last three months of 2015.
"The preliminary data we have so far for 2016 does not in any way show a slowdown," De Guindos said, adding that strong growth would help the country make any necessary deficit adjustments.
The acting economy minister -- whose centre-right government slashed spending during a deep recession and brought in a labour reform contested by rival parties -- has long argued that reversing some of these policies would damage the economy.
(Reporting by Jan Strupczewski and Francesco Guarascio in Brussels; Additional reporting by Sarah White in Madrid; Editing by Catherine Evans)
