AN extremely serious accusation, especially the second part:

The European Union is likely to take action against Spain's newly installed government by May for delaying austerity measures ahead of a regional election next month, sources familiar with the situation told Reuters.

A final decision still has to be made, but the European Commission believes the new government overstated the deficit figures for 2011 so the current year's data would look better.

If this proves to be true, heads should roll. To begin with, because the bigger-than-expected deficit was the reason given to break the "read my lips: no more taxes" pledge during the campaign. Furthermore, such a thing would destroy the credibility, and trust is a must for the recovery.

Let's see what the Rajoy government responds.

UPDATE. The EU's economic affairs spokesman categorically denies the information, calling it "speculative" and "premature"; apparently they still haven't seen the official data, so they can't be suspicious on whether it's inflated.

Stay tuned.

UPDATE II. An even more categorical denial of the Reuters information, by Brussels.