Lex: Spain's economy

Spain's Socialist government on Friday admitted a larger-than-expected budget deficit for 2009 and unveiled a hastily produced plan to narrow its deficits by E50bn over the next four years. Like the smaller economies of Greece, Portugal and Ireland, Spain is trying to shore up its credibility on international markets. A surge in sovereign bond yields this week showed investors were concerned about loose fiscal policies and the cohesiveness of the eurozone. Elena Salgado, finance minister, said the aim was to cut the deficit from a higher-than-predicted 11.4 per cent of gross domestic product in 2009 to 3 per cent in 2013, in line with Spain's promises to meet European Union budget rules. Richard Stovin-Bradford analyses the latest budget.