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ECONOMY

Spain seeks Eurogroup support for draft 2014 budget

Brussels has warned government of need for further cuts worth 35 billion euros

Luis Doncel

At the Eurogroup meeting held on Friday Spanish Economy Minister Luis de Guindos was hoping to canvas support from his European colleagues for Spain's draft 2014 budget after the European Commission suggested the government risked missing its deficit targets.

In a report released by Brussels last Friday the Commission calculated that the government needs to introduce further budget measures worth 35 billion euros over the next three years to bring the shortfall in its finances back within the EU ceiling of three percent of GDP by the end of 2016.

At the time De Guindos affirmed the government's full commitment to cutting the deficit to 5.8 percent of GDP next year and rejected any idea that the 2014 budget needed to be amended, attributing the "minor" differences with regard to Brussels' position to the fact that the government is expecting GDP growth next year of 0.7 percent, 0.2 points more than the Commission.

At this stage the Commission cannot force the government to amend the budget, but if De Guindos' fellow economy ministers side with Brussels, this would constitute a "political message" that would be difficult to ignore," EU sources said.

Separately, in a report released Friday the IMF sided with De Guindos' objections to a former Bank of Spain director being appointed to head the private-sector Spanish Banking Association so soon after leaving office. In response, the Bank of Spain said it would review its conflict of interests policy, which bars former directors from taking up posts in the private banking sector within six months of leaving. The cooling-off period for state officials is two years.

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