(Dow Jones)--Spain surprised Monday with a higher-than-expected budget deficit for 2011, lending new urgency to the government's efforts to negotiate new budget targets with the European Union.
The Spanish budget ministry said Spain's total public-sector budget deficit stood at 8.51% of gross domestic product last year, far above the country's target of 6% and even the 8% estimate the new government of Prime Minister Mariano Rajoy gave in December.
According to the budget ministry, Spain's regions were responsible for the biggest portion of the 2011 overrun. They had a budget gap equal to 2.94% of GDP, compared to a target of 1.3%.
In highly decentralized Spain, the regions control over one third of spending, complicating the government's deficit-reduction push.
http://online.wsj.com/article/BT-CO-20120227-712531.htmlSpain's unemployment rate is
already 23%. Further massive austerity measures are not an option. At least the inflation rate (2% vs 2.7%) is slightly below the EU average now.