Brussels Growth Forecast for Spain as Expected, Says Rajoy
February 28th, 2012
Spanish Prime Minister, Mariano Rajoy, announced that the State Budget to be presented by the Government on 30 March “will be realistic and contain a sensible and reasonable revenue forecast”. Furthermore, he reiterated that Spain will meet its deficit targets and that he has no intention of raising taxes.
Mariano Rajoy met with the Italian Prime Minister, Mario Monti, in Rome last week to exchange points of view on the reforms being implemented in Spain and Italy to boost the economy and employment.
During the joint press conference that followed their meeting, the Spanish Prime Minister referred to the data from the European Commission forecasting that the Spanish economy will shrink by 1% in 2012.
Rajoy said that he had been expecting such a forecast. “I was fully aware that the forecast would say that; it could even have been worse”.
Rajoy insisted that, given these figures, “the Spanish Government will be realistic” and will present a macroeconomic framework during the first fortnight of March containing a forecast for negative growth, in line with the estimates from the Bank of Spain, the International Monetary Fund and the European Commission. “-1% will not be the most optimistic forecast of the three”, he said.
According to the Government newsletter, La Moncloa, they will then set a “prudent” ceiling on the State expenditure, said Rajoy, and also the deficit target for all the Public Administration Services.
The President of the Government stressed that Spain will meet its public deficit targets and that decisions are being taken in defense of the general interests of the Spanish people.
Furthermore, he reiterated the Government’s commitment to fiscal consolidation but also to measures aimed at economic growth and job creation.
“We are going to continue the reductions and approve an austerity budget. From thereon, what we need are growth policies because I have no intention of raising taxes”, he said.
Mariano Rajoy believes that the goal of the labour reform is to ensure that adjustments are not made through job cuts and that SMEs can hire people. “It is a reform for growth, as is the reform of the financial system”.
The Italian Prime Minister, Mario Monti, welcomed these reforms, saying “I am pleased to be able to publicly say that I am impressed by Spain’s reform of the banking system and the labour market, which we think are moving in the right direction”.
Mario Monti proposed to Mariano Rajoy that direct contact be established at a technical ministerial level in order to exchange ideas.
Mariano Rajoy also spoke with Mario Monti about the reforms needed in Europe and the situation in Greece, as he did in London last Tuesday with the British Prime Minister, David Cameron.
The two leaders support the decision by the European Union to issue another tranche of aid to Greece and signed the joint letter from twelve Heads of Government in Europe to the President of the European Council, Herman Van Rompuy, and the President of the European Commission, José Manuel Durao Barroso, containing proposals on policies to boost growth and employment.
The Spanish Prime Minister believes that “Europe needs reforms, courage to tackle the crisis and to explain to the public that things need to be done”.
“We need to continue implementing these reforms but they will not take effect in the short term, thus making them harder for people to understand. However, we are laying the foundations for the future and serious governments cannot govern if they only think about the short term”, he said.
When asked whether the measures adopted by the Government will generate a social reaction in Spain, Mariano Rajoy replied “I can only say that Spain and the rest of Europe need moderation, common sense and balance, and that governments make decisions while thinking about the medium and long term, and in the general interests of their people, and that is how we explain our decisions”.
Rajoy says he is convinced that if the measures taken are perceived as fair and equal, “there will be no social tension”. “We do not take decisions to make things difficult for anybody, but rather in an attempt to improve things and prepare for a better future. I do not think anything out of the ordinary will happen because I believe in the maturity, balance and common sense of the Spanish people”, he said
