Brussels: Spain will be given time till 2016 to bring its budget deficit down below 3 percent of gross domestic product, in line with European Union mandates, European Commissioner for Economic and Monetary Affairs Olli Rehn said Friday.
"For France and Spain it is very obvious that it is more reasonable to have a correction of the excessive deficit over another two years," Rehn said at a press conference in which he presented the European Commission's macroeconomic forecasts for 2013 and 2014.
He said the fallout from the collapse of a long-building credit and housing bubble in Spain was weighing heavily on the economy, employment and the Spanish people.
Spain's unemployment rate hit 27.16 percent in the first quarter of this year, with the number of jobless people topping 6 million for the first time, according to the National Statistics Institute.
In the stability program it delivered last month to Brussels - which was based on the recommendations of the EC, the EU's executive arm - Spain extended its timetable for bringing down its deficit as a percentage of GDP.
Whereas Spain had initially planned to get its deficit below the 3 percent threshold by 2014, it now says it will lower it to 6.3 percent of GDP by the end of 2013, 5.5 percent of GDP by the end of 2014, 4.1 percent of GDP by the end of 2015 and 2.7 percent of GDP by the end of 2016.
In its macroeconomic forecasts for Spain, the Commission said Friday it expects Spain's deficit to come in at 6.5 percent of GDP in 2013 but then climb to 7 percent of GDP next year.
The EC forecast that the Spanish economy will contract by 1.5 percent this year before coming out of recession with slight growth of 0.9 percent in 2014.