Spain announced today that it will fall well short of a budget target agreed upon with the European Union (EU) as the bloc passed a major fiscal agreement meant to stave off a rising crisis within the eurozone, Reuters reported.
More from GlobalPost: How important is this new EU treaty?
Spanish Prime Minister Mariano Rajoy unveiled what he called a new, "sensible" goal of 5.8 percent of gross domestic product (GDP), far higher than the former 4.4 percent goal, in a move that could leave Spain vulnerable to EU sanctions, said AFP.
Speaking to reporters in Brussels today, Rajoy promised that the changed outlook would not affect Madrid's pledge to reduce the public deficit to three per cent of GDP by 2013 as required by the EU’s stability and growth pact, reported the Financial Times.
More from GlobalPost: Peru, Latin America's hidden growth story
Rajoy's conservative government came to power in December amid frustrations over the economic policies pursued by the then-ruling Socialists.
Officials said the new target came in response to soaring unemployment in Spain, where the economy is now expected to contract by 1.7 percent this year -- lower than previous EU estimates, according to the Associated Press.
But the move is likely to be met with resistance by the EU, with both German Chancellor Angela Merkel and European Council President Herman Van Rompuy admonishing the bloc's weaker economies to meet their fiscal targets, said Reuters.
Markets fell slightly with Spain's announcement today, said Reuters, despite the passage of a new EU economic treaty meant to boost the region's crippled economy.