EU may punish Spain for austerity delays: report (by Barbara Kollmeyer)

MADRID (MarketWatch) -- The European Union may punish Spain's government, led by Prime Minister Mariano Rajoy, by May for holding off on austerity measures ahead of a regional election in March, Reuters reported Tuesday, citing a source familar with the situation. The report also cited three senior European Union officials, who said the European Commission thinks Spain overstated 2011 deficit figures to make this year's deficit look better, and that it's also moving too slow in addressing a deterioration in public finances that is expected this year. Amadeu Altafaj Tardio, spokesman for Economic and Monetary Affairs Commissioner Olli Rehn dismissed the report as "absolutely speculative and misleading." He said Spanish authorities themselves found slippage at the end of 2011 and have taken action to correct that, and added that "we cannot speculate on what will be the assessment for 2012 because the budget doesn't even exist yet. We can't come to a conclusion when it hasn't even been presented."