MADRID (Reuters) – Spain’s new government said on Friday the public deficit for 2011 would come in at 8 percent of gross domestic product, well above a target of 6 percent, and announced income and property tax hikes and a civil servant wage freeze in response.
Spain has been under market scrutiny about its ability to control public finances, and Madrid has seen risk premiums soar to record highs on contagion fears as the euro zone debt crisis has spread.
Deputy Prime Minister Soraya Saenz de Santamaria in the new centre-right government outlined public spending cuts worth 8.9 billion euros ($11.5 billion) to tackle the deficit.
“We’re facing an extraordinary and unexpected situation, forcing us to take extraordinary and unexpected measures,” Santamaria said.
While Italy debt mountain has been
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