Rajoy to Raise Taxes, Cut Spending as Deficit Exceeds Target

Spanish Prime Minister Mariano Rajoy announced 14.9 billion euros ($19.3 billion) of spending cuts and tax increases, with public finances in worse shape than the previous government and the European Union had expected.

The deficit this year will reach 8 percent of gross domestic product, requiring tax increases of about 6 billion euros and spending reductions of 8.9 billion euros, spokeswoman Soraya Saenz de Santamaria said at a press conference in Madrid. The previous government had targeted a deficit of 6 percent, while the European Commission saw a shortfall of 6.6 percent and economists surveyed by Bloomberg estimated a 6.9 percent gap.