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Photograph: Freeimages.com/J. U.

Spain missed the target agreed with the European Union for cutting its budgetary deficit last year, Prime Minister Mariano Rajoy announced in Madrid on Thursday.

The 2015 deficit came in at 4.5 per cent of gross domestic product (GDP), 0.3 percentage points above the target of 4.2 per cent. The target for this year has been set at 2.8 per cent of GDP.

The European Commission and the International Monetary Fund had warned repeatedly that Spain, which is emerging from a severe economic downturn, would not attain its 2015 and 2016 targets.

Spain's conservative People's Party government had rejected the warnings.

Rajoy said Spain had made great efforts under the last parliament from 2011 to 2015 to cut the deficit, achieving a reduction from 9.1 per cent to 4.5 per cent of GDP over the period.

Spanish media attributed the failure to reach the 2015 target to the government disbursing too much money to the regions.

Under EU rules, national deficits are supposed to be brought down to 3 per cent of gross domestic product. Within the eurozone, the commission can enforce its recommendations with fines.

Spain's neighbour, Portugal, has also faced pressure from the EU over its public finances. The commission warned last week that Lisbon's 2016 budget risks violating the bloc's financial discipline rules.

Eurozone finance ministers were discussing the Portuguese budget on Thursday afternoon at a meeting in Brussels. German Finance Minister Wolfgang Schaeuble urged Lisbon not to reverse course, amid calls in the country for less austerity.

"Portugal would be well advised ... not to further alarm the markets by stoking the speculation that it wants to reverse the taken path," he warned. "That would be very dangerous for Portugal."

Both Portugal and Spain are former eurozone bailout recipients.

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