Spain, Portugal Warned to Stick with Budget Cuts
Byline: Aoife White Associated Press
BRUSSELS -- The European Union's executive warned Spain and Portugal on Tuesday they will have to keep up budget cuts in 2012 to curb their deficits and rein in a debt crisis that has sapped investor confidence in Europe's economy.
In reports published Tuesday, the European Commission says Spain may have to draft "further sizable corrective efforts" in coming years and Portugal may also have to do more to bring budget deficits down to the EU's maximum of 3 percent of gross domestic product by 2013.
Spain and Portugal were pressed in May into making major budget cuts by other EU nations, who were worried that the two eurozone nations' heavy borrowing could force them to follow Greece in requiring a bailout to make debt repayments.
The EU gave a broad seal of approval to their current debt reduction aims, describing them as "sufficient." It said nine other eurozone nations -- including Germany and France -- are also on track with programs to slim their deficits.
EU Commission President Jose Manuel Barroso told the European Parliament that government moves to tackle debt was essential to restore confidence in Europe's economy.
"Without confidence coming back to the financial markets in Europe, we will not be able to achieve that higher level of growth . …