Spanish PM: The Worst is Over
June 22nd, 2009
Spanish PM says worst of crisis over, economy recovering – PM sees return to growth in 2010 – PM defends tax hikes after Bank of Spain criticism – Opposition says voters deceived by talk of green shoots
Spanish Prime Minister Jose Luis Rodriguez Zapatero on Wednesday said Spain should return to growth in 2010 after the central bank warned recovery could be delayed by soaring unemployment and public borrowing.
“The government considers the worst of the crisis is already over and our recovery will continue progressively, gaining more intensity in 2010, and its reasonable to expect growth by the time we get to 2011,” Zapatero told Congress during parliamentary question time.
The central bank on Tuesday said Spain might not be able to take advantage of an economic upturn without labour reforms to curb unemployment and spending cuts to rein in a public sector deficit set to nearly triple to 10 percent of GDP by 2010.
Spain has launched one of Europe’s biggest economic stimulus plans to counter an unemployment rate that has more than doubled to 18.1 percent during the global crisis and a Spanish property collapse.
The Socialist government expects to increase public borrowing by about 150 billion euros ($208.3 billion) or 15 percent of GDP to pay for plans ranging from an 8 billion euro temporary job creation scheme to income tax rebates.
Economy Minister Elena Salgado on Tuesday said emergency spending could be expanded to include new benefit payments for unemployed workers whose dole has run out.
Bank of Spain Governor Miguel Angel Fernandez Ordonez said unemployment could keep rising and the government might push public debt above 60 percent of GDP next year, sending risk premiums on Spanish paper higher.
“Room for fiscal policy to stimulate spending has been exhausted,” Ordonez said. Government moves to pay for spending with tax hikes could cancel out the impact of stimulus measures, he added.
Zapatero said the government had cut taxation to 32 percent of gross domestic product, the lowest level since 1995, and could afford 2.3 billion euros in hikes on tobacco and fuel levies made last week, five days after European elections.
Spain’s opposition Popular Party (PP) said Economy Minister Elena Salgado had deceived voters with talk of economic “green shoots” in the run up to the June 7 vote.
The ruling Socialists lost the election to the PP by nearly four points, marking their first national defeat since 2000, and on June 12 forecast the economy would not return to annual growth until 2011.
“You will be remembered as the green shoots minister,” PP economic spokesman Cristobal Montoro told Salgado in Congress.
Story from The Guardian
Related Posts
- Zapatero: Worst Financial Crisis Since WW2
- Spain: Economy Seeks Urgent Government Reform
- Spanish Assistance Assured Around April
