The European Commission (EC) will be publishing its winter economic forecasts next Friday and these will include individual countries' deficit targets.

Markets are currently expecting Brussels to ease the requirement for Spain down to 4.8% of 2013 GDP (gross domestic product) which would imply a 1.8 percentage point reduction to the still unofficial figure expected to have been reached last year.

The Spanish newspaper El País reported Monday morning that if the EC ends up allowing Spain more time to get its finances in order, then the central government will share with its autonomous regions part of this greater leeway when it comes to reducing red ink at the regional level. The last time that the requirements were eased for Spain's central government Madrid did not pass on any of the lessened pressure to provincial authorities.

Spanish Economy Minister Luis de Guindos indicated at the end of January that he would consider a review of regional deficit targets if the EC granted the country more time.

The Catalonian government, often in the news for its push for independence from Spain, has been particularly vociferous in its demands that deficit targets be eased for the region.

MG

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