The Spanish government may decide to 'personalize' the deficit targets for each of the country's 17 autonomous regions, which all currently have a deficit target of 1.5 percent, according to sources cited by El País.

"In a matter of days, Eurostat will confirm Spain's deficit and when it does we'll have a different path for deficit targets, as suggested by European Economic and Monetary Affairs Commissioner Olli Rehn," Spain Budget Minister Cristobal Montoro said on Thursday.

"We will then negotiate with the regions according to the new deficit targets."

Spain expects the European Commission (EC) to ease its deficit target, which it then expects to pass on to the regions.

On Thursday morning, data showed that retail sales contracted by 10.2% year-on-year in January compared to the 8.3% expected by the market consensus.

Nonetheless, Spanish government sources expect the country to exit recession in the third quarter, Reuters reports.

According to the same sources, Spain's gross domestic product (GDP) growth is expected to remain flat in the third quarter and to rise slightly in the fourth quarter thanks to export growth.

MG

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