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Spain’s regions will exceed their deficit target this year, an economic study warned yesterday, complicating efforts by the central government to repair its finances and avoid a bailout.

The government has promised to cut Spain’s overall deficit from 8.5 per cent of output in 2011 to 5.3 per cent this year and three per cent next year, requiring a big effort by the 17 regional administrations that control key budgets.

The regions are blamed for much of the overshoot last year and the government has ordered them to cut their deficits – the shortfall of revenue to spending – from 2.94 per cent of gross domestic product to 1.5 per cent in 2012.

But the economics found-ation FEDEA warned on Friday that, based on the budget plans presented by the regions, “the year 2012 will end with a deficit of 2.2 per cent of GDP, an excess of 0.7 percentage points over the new target”.

It forecast that all the regions will exceed the target except three: Madrid with a 0.8 per cent deficit, Rioja in the north with one per cent and Galicia in the northwest with 1.1 per cent.

Among the regions with the highest deficits will be Castilla-La Mancha with 4.9 per cent, Murcia with 3.7 per cent, the Balearic Islands with 3.4 per cent and Valencia with 3.3 per cent.

Spain’s deficit is a major concern for its European neighbours and financial markets. Economists have not ruled out that Spain might need to be bailed out by international lenders.

The conservative national government has presented tens of billions of euros in spending cuts and other money-saving measures, prompting mass street protests.

It has threatened to seize control of public budgets from the regions, which are respons-ible for education and health spending, if they do not cut their deficits.

“The data presented in this report can be improved with new measures and readjustment plans,” the foundation said, however.

“The reputation of our fiscal consolidation must not let the regions miss their targets,” it added.

“The government must do all it can to discipline them, including drastic measures to intervene in a region if necessary.”

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