The Spanish government revealed on Wednesday that its budget deficit dropped to 6.7 per cent of gross domestic product last year – lower than expected by analysts and close to the EU’s official target.

Mariano Rajoy, prime minister, hailed the reduction as “a huge effort by all of society”, claiming it would “increase confidence in Spain”.

The upbeat statement from Madrid offered a sharp contrast to the glum political mood descending on Rome, where party leaders are struggling to come to terms with the result of this week’s Italian general election. The vote failed to produce a clear winner, and appears to offer little prospect of stable government in the near future.

The threat of political deadlock in Italy has rattled the nerves of investors and politicians in capitals across Europe – but it poses a particularly complex challenge to policy makers in Madrid.

Spanish politicians have been quick to point out that the two economies are, at least from an investor point of view, closely intertwined. Indeed, Spanish and Italian bonds fell sharply in response to the election, and again moved in lock-step on Wednesday, when they recovered some lost ground.

The close correlation between the two countries was highlighted by Luis de Guindos, Spain’s finance minister, who remarked this week that “what is good for Italy is good for Spain, and vice versa”.

But Spanish officials are also keen to extract another message from recent events in Italy and other parts of Europe – namely that Spain should no longer be seen as the undisputed laggard among the big eurozone economies.

Spain, they point out, not only has a stable government, but also one that remains committed to the type of austerity measures and structural reforms that sparked a backlash in Italy and are under mounting attack in France.

Analysts agree that, at least for the moment, there is little risk of Italian-style political deadlock in Spain.

“We have anti-system forces at the fringes, not at the centre of politics,” said José de Areilza, a professor at Esade, a Spanish business school.

“So far, we have not had comedians winning 50 per cent of the vote,” he added, in a reference to Beppe Grillo, the leader of Italy’s anti-establishment Five Star Movement, and Silvio Berlusconi, the controversial former prime minister.

Prof de Areilza argued that the Italian election result would be likely to trigger a rethink among European policy makers about the merits of recent austerity policies – but were unlikely to derail the plans of the Spanish government in the near future. “They have a comfortable majority and Rajoy is keen to go ahead with further reforms,” he said.

But it is not just political stability that makes Spain currently appear in a more favourable light, but also the perception among investors that the Madrid government – unlike some its European peers – is at least moving in the right direction. The lower-than-expected budget deficit revealed by Mr Rajoy on Wednesday is a case in point.

Madrid is likely to end up with the worst budget shortfall of all eurozone governments last year. What is more, even the better than expected 6.7 per cent deficit cited by the Spanish leader will still be above the official Commission target of 6.3 per cent.

Yet it was not Spain but France that drew the negative headlines last Friday, when the Commission unveiled its official economic forecasts, and used the opportunity to urge Paris to do more to overhaul its economy.

The Commission has made clear repeatedly that it will give more time to Spain to meet its deficit targets, arguing that the government has pushed through important reforms.

Still, as pleasing as it may be for Spaniards to see the spotlight finally fall on other countries’ economic and political weakness, analysts argue they have little to gain. “This is no time for schadenfreude,” says Prof de Areilza. “We are all in the same boat.”

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