Spain's 2011 budget deficit worse than already pessimistic prediction

Spain government's is facing more pressure Tuesday to enact further painful austerity measures, after figures showed the public finances in 2011 were in even worse shape than its already pessimistic predictions.

On Monday, the government revealed that its budget deficit for 2011 came in at 8.5 percent of national income. After taking power in December, the conservatives raised the budget deficit forecast to about 8 percent from the previous government's 6 percent.

The higher than expected 2011 outcome is likely to ratchet up the pressure on the new government to announce more deficit-cutting measures if it's to get the budget deficit down to the stated goal of 4.4 percent of gross domestic product this year, unless it gets some relief from the EU in the form of an easier 2012 target.

Controlling the deficit is not solely in the hands of the Spanish government though as the country's figures include revenue and spending by the central government and that of Spain's 17 regions. The government claims that worst overspending was by the regions.

The government recently denied a news report that it had exaggerated its unofficial estimate of the 2011 deficit so as to improve its chances of getting easier terms from the European Union.

Finance Minister Cristobal Montoro said the figures showed that the government was "not exaggerating."

The center-right Popular Party took power in December after scoring a landslide win in November elections as Spaniards fed up with what is now a near 23 percent jobless rate punished the previous Socialist government.

The new government has said it will present a new full-blown 2012 budget by the end of March. It is there that Spaniards can almost certainly expect some degree of fresh pain.

The government has already enacted a ñ15 billion ($20 billion) package of spending cuts and income tax hikes, even though the economy shrank in the fourth quarter and is forecast to do so in this quarter too. That would drag Spain back into a technical recession, defined as two consecutive quarters of negative growth. It only just limped out of one in 2010.

A much bigger austerity package is likely on the way if the government is forced to stick to the 4.4 percent goal for the deficit for 2012.