The Spanish government on Tuesday evening denied reports earlier in the day alleging it had deliberately inflated the level of its public debt.

The original story, published by the Reuters new agency, cited anonymous sources at the European Commission as saying that the government of Mariano Rajoy artificially raised the level of the country's deficit to 8 percent.

On taking power at the end of December, Rajoy's Popular Party (PP) announced that they had discovered a deficit of 8 percent, rather than the 6 percent they were expecting. Then they used this as a reason for introducing spending cuts, as well as across-the-board tax increases, despite electoral promise not to raise taxes.

The Spanish government called the accusations "absolutely false," while the PP spokesman in Congress Alfonso Alonso said that the government had "unveiled the details of the deficit and the black holes that had previously been hidden from view."

He insisted that the government had principles of "transparency and were always telling the truth."

Meanwhile, the EU spokesman for Economic and Monetary Affairs Amadeu Altafaj also said Reuters' story was "completely false."

Spain agreed in October to reduce its public deficit to 4.4 percent of the country's GDP by the end of 2012.

Had it lowered the deficit to 6 percent by the end of 2011, it could have been considered on course to meet its target. But with a deficit of around 8 percent as the new PP government claimed, further fiscal reform is still needed in the country.