Tough year ahead for eurozone countries
At least two eurozone countries have warned of difficult times for the region in the year ahead. Spain’s finance minister says the country’s public deficit for 2011 could exceed eight per cent of gross domestic product while Germany has admitted the new year will probably be more difficult than the last.
Luis de Guindos told radio station Cadena Ser that the deficit for 2011 will surpass the six per cent originally forecast.
“ We are in a very difficult situation, very complex and without a doubt the hardest in the past decades in Spain,” he said.
The government announced on Friday spending cuts and tax increases aimed at clawing back 15.1 billion euros in 2012, but the country’s 17 autonomous regions are a cause for concern.
These regions were particularly hit by the housing crash in 2008 and account for the difference in the deficit forecast.
Prime Minister Mariano Rajoy, who beat the Socialists in November elections has vowed to reduce the public deficit to 4.4 per cent of GDP in 2012.
Meanwhile, German Finance Minister Wolfgang Schaeble said the country must not ease up on its efforts to achieve a balanced budget.
The German budget deficit is estimated to have reached 20 billion euros in 2011, lower than expected due to the last two years of strong economic growth. But it could rise again to 26 billion euros this year.
But Schaeuble stressed the German economy was in good shape and urged other countries to push through the necessary reforms to resolve the long-running debt crisis.