Spanish government rebels against EU austerity

The Spanish government has defied the EU over its budget deficit target, setting its own budget deficit target 1.4% above the EU-imposed maximum.

The Spanish Prime Minister, Mariano Rajoy, described the act of defiance as a "sovereign decision" and broke with recent tradition by not informing the French and Germans beforehand.

Unlike Greece, Portugal and Ireland, a Spanish bailout would bankrupt Germany and the collapse of the fourth largest €urozone economy would devastate the single currency.  All of which means they can pretty much do what they want without the kind of threats given to Greece to ensure subservience.

News of Spain's defiance comes at the same time as the Irish government confirmed that it will be holding a referendum on the EU Fiscal Treaty which will be a huge disappointment to the Merkozy who thought they'd finally got their fiscal union in the bag.