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

Some officials in Brussels had privately suspected the 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 the Eurostat data.

Indebted Italy's deficit came in at 3.9 percent of gross domestic product, Eurostat said, as Rome had earlier reported, while 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 with the centre-right coalition on how to cut the 2012 budget, was 4.7 percent of GDP in 2011, as Statistics Netherlands had said in March.

The 2011 figures come 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.

(Reporting by Robin Emmott; editing by Rex Merrifield)

• A Permanent Economic Emergency