EU may punish Spain for deficits

The EU is likely to take action by May against Spain’s newly installed government for delaying austerity measures ahead of a regional election next month, sources have said.

An official from the Spanish government said the administration was doing its job on deficit reduction and that the EU was supporting the effort.

A final decision still has to be made, but the European Commission believes the government overstated the deficit figures for 2011. Spain is also not addressing quickly enough the deterioration in public finances expected in 2012, risking the country’s longer-term growth, officials said.