Spain would likely be given until 2015 or 2016 rather than 2014. A Commission spokeswoman declined to comment. The commissioner in charge of Economic and Monetary Affairs, Olli Rehn, said last month he would assess Spain's fiscal targets in February, adding that no additional austerity efforts would be required this year and next, while new structural reforms were needed for 2014 and beyond.
European and Spanish sources told Reuters in December that Spain's fiscal path would likely be softened in order to mitigate the impact of the country's second recession in three years, but that no decision had yet been made. Such decisions need a formal discussion between the 27 European commissioners as well as a political green light from the euro zone's 17 finance ministers.
A European official also said the Commission was working on a list of reforms it wanted Spain to undertake soon, such as new changes to state pensions and an overhaul of the tax system. As revealed by Reuters on December 12, Spain will soon present a law to restrict index-linking of pension payouts and to speed up the phasing-in of a higher retirement age. Both are EU demands the country must meet in order to tap international aid to bring down its debt costs and fix its stricken economy.
Spain sought support from its European partners this year for its ailing banks, hit by a burst property bubble. Recession is also undermining government efforts to keep the public debt burden in check, and financial markets expect Madrid to seek sovereign aid sometime next year. According to El Pais, the Commission has agreed for Spain on a new deficit path of 7 percent of economic output in 2012 and 6 percent in 2013. That compares to current targets of 6.3 percent for 2012 and 4.5 percent for 2013.