Spain's budget deficit was confirmed at 8.5 percent of economic output in 2011 by the EU's statistics office Eurostat on Monday, dispelling doubts about the new Spanish government's reading of its national accounts.

The latest flare-up in the euro zone's debt crisis was partly sparked Madrid announcing it had inherited a worse-than-expected deficit from its predecessor.

Some officials in Brussels had privately suspected the new government of Prime Minister Mariano Rajoy might have overstated the 2011 deficit so this year's data would look better, something Madrid strongly denied.

Commission inspectors went to Spain to evaluate public accounts after Madrid said at the end of February that its deficit was 8.5 percent of economic output last year, above the Commission's earlier 6 percent forecast.

Their visit appears to have confirmed that figure, according to Eurostat, and the Commission expressed confidence in Spain.

I don't think we should have any doubt about the reliability of the Spanish statistical office and of the commitment of the Spanish authorities to provide clarity, Commission spokesman Amadeu Altafaj told reporters.

On the contrary... we have very fluid and regular exchanges with the Spanish authorities, in order to clarify the current fiscal positions but also the fiscal consolidation path. So we have no concerns, no doubts in this respect.

Market concerns about the euro zone's fourth largest economy have deepened in the past few weeks. Yields on the government's 10-year bonds, which reflect the risk investors attach to owning Spanish debt, have risen above 6 percent, a level that has proved a trigger point for other countries.

The 2011 figure comes as the European Commission seeks to punish governments who massage their economic statistics, aiming to stamp out political meddling that allowed Greece to lie about its borrowings in 2009 and trigger the crisis.

Despite its new powers, Eurostat still relies on country data for its figures and the Commission wants EU statistics to be seen as credible as possible to win back investor confidence as it polices the bloc's borrowings and budgets.

In its release, Eurostat said indebted Italy's deficit came in at 3.9 percent of gross domestic product, as Rome had earlier reported. Portugal and Greece, both saved from insolvency by emergency euro zone funding, were confirmed as having deficits of 4.2 percent and 9.1 percent respectively.

In Ireland, the government said it ran an underlying budget deficit of 9.4 percent last year, beating its EU/IMF deficit target by more than one percentage point, citing Eurostat.

The budget deficit in the Netherlands, where the anti-EU Freedom Party has refused to agree on how to cut the 2012 budget, was 4.7 percent of GDP in 2011, as Statistics Netherlands had said in March.

(Reporting by Robin Emmott; editing by Rex Merrifield/Jeremy Gaunt)

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