Spain and Italy Unite to Promote Employment and Banking Union

During a press conference this week, following a meeting between the Spanish Prime Minister, Mariano Rajoy, and Italian Prime Minister, Enrico Letta, at Moncloa Palace, both leaders stressed that Spain and Italy are firmly committed to the project of European integration and that they are determined to do everything possible to provide the stability necessary for the economic and monetary union to return to growth.

The two leaders urged European institutions to put in place the measures agreed last June, and adopt new initiatives in order to promote youth employment and the banking union, and in this regard, Rajoy said that the reforms that the two countries are carrying out “is not an option, but the obligation we have to our citizens’ future, and essential if we are to ensure the survival and sustainability of our social model”.

Rajoy recalled that in June 2012 the European Council made “important decisions over the future and stability of the eurozone economy,” and he stressed the need to adopt “soon, without delay, those decisions we committed to”. He said: “the banking union, the fiscal union and the political union must move faster”, and expressed his confidence that the forthcoming European Council meeting would involve a steady progress towards this goal.

Rajoy also announced that Spain and Italy will be coordinating bilaterally and with other European partners in order to “design and propose new European instruments for growth and employment”.

Rajoy reiterated that Italy and Spain share the conviction that the debate between austerity and growth is a false choice, saying: “Without austerity only the imbalances will grow. Hence the necessary fiscal consolidation and growth must go hand-in-hand. If our final station is employment, we will only get there on the train of growth via routes of deficit reduction.”

In response to reporters’ questions on taxation, Rajoy said that from the macroeconomic point of view, Spain is better, and so they will not need to raise the taxes that most affect citizens such as income tax and VAT. However he added that, although he would like to lower income tax, “a Government cannot forget reality.”

Rajoy went on to say that “at the latest” in 2015 income tax would return to it’s previous level, with the difference being that the economy will have stabilised.