Spain January-November Budget Deficit 1.28% Of GDP

Spain January-November Budget Deficit 1.28% Of GDP

MADRID (Dow Jones)--The Spanish government's budget deficit continued to widen in November as the result of falling economic activity and a series of tax cuts.

The central government had a deficit for the first 11 months of the year of EUR14.06 billion, equal to 1.28% of gross domestic product, the Spanish Finance Ministry said Tuesday.

The government's revenue fell by 12% in the same period, the finance ministry said.

Spain is experiencing one of the European Union's most pronounced economic downturns after the global financial crisis hastened the collapse of a decade-long construction boom.

After several years of near 4% GDP growth, Spain's GDP fell 0.2% in the third quarter from the second quarter - its first quarterly contraction since 1993.

To counter the downturn, the government has rolled out a series of fiscal stimulus measures - tax cuts and spending programs - worth 2% of GDP this year.

Spanish Finance Minister Pedro Solbes last week said he forecasts Spain's public sector - central government plus regional governments and social security administrations - will have a deficit equal to 3% of GDP this year and over 3% next year.

European Union rules require the fifteen countries using the euro to keep budget deficits within 3% of GDP.

-By Jonathan House, Dow Jones Newswires; +34 91 395 8120; [email protected]

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(END) Dow Jones Newswires

December 23, 2008 07:43 ET (12:43 GMT)

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