The latest macroeconomic forecasts for Spain released by the European Commission are slightly more negative than its previous predictions and, as a result, Brussels appears willing to give Spain another two years to get its finances in order and bring its budget deficit back within the European Union ceiling of 3 percent of GDP.
France is also likely to benefit from such an extension. The EC is now forecasting that the Spanish economy will shrink by 1.5 percent this year, up from an earlier forecast of 1.4 percent. The Spanish government expects a contraction of 1.3 percent, recently revised from a rather bizarre and unrealistic decline of just 0.5 percent.