Spain, France get EU budget alert, Greece agonises

Page last updated at 11:24 GMT, Friday, May 11, 2012 - 16:24 EST

Reuters:

Spain and France came under intense pressure from the European Commission on Friday to deepen their deficit cuts as anxiety mounted over Greece's ability to stay in the euro zone.

Last ditch efforts to form a Greek government after last Sunday's inclusive election ran into trouble and ratings agency Fitch said a Greek exit would damage all 17 euro zone countries and prompt it to review their credit ratings.

Presenting its twice-yearly economic forecasts, the European Commission said Spain would run a deficit of 6.4 percent of economic output this year and 6.3 percent next year, with both targets substantially above levels already agreed with the EU.

France, the euro zone's second largest economy, will also miss its 2013 budget deficit goal of 3 percent by a wide margin, the Commission said, meaning new President Francois Hollande will have to take swift action to cut spending and raise taxes.

Read the whole story: Reuters