Monday, December 24, 2012

Spain’s recession-battered economy to grow and create new jobs in year 2014

By AFP

MADRID, Tuesday
Spain’s recession-battered economy will grow and create jobs in 2014, the country’s Prime Minister predicted in an interview published on Monday.

Mr Mariano Rajoy told the conservative daily El Mundo that he hoped an improving economy would allow him to reverse some painful and unpopular austerity policies, including a rise in income tax. “I hope next year will be better,” he said.

“I am confident — and all the international organisations and analysts’ reports confirm this — that 2014 will be a year of economic growth and job creation,” the premier said.

The eurozone’s fourth largest economy fell into recession in mid-2011, less than two years after emerging from the last downturn sparked by a 2008 Spanish property crash and global financial crisis.

The government has forecast a 1.5-per cent economic slump this year. It expects a further 0.5-per cent contraction in 2013, far more optimistic than other forecasts such as those of the OECD, which forecasts a 1.4-per cent decline.

The leader of the right-leaning Popular Party, who took power a year ago promising to create jobs and fix Spain’s finances, said the economic situation he inherited was worse than he had anticipated, with a bigger-than-expected deficit and a recession.

“My most important priority is to get Spain out of the crisis,” said the 57-year-old premier the newspaper chose as its person of the year.

“As economic activity improves and the government brings in more income, we will change some decisions such as income tax,” Mr Rajoy said.

His government raised the top rate of income tax to 52 per cent to help rein in the public deficit shortly after being sworn in.

The Spanish leader said he did not regret any economic measures he had taken but he realised they had angered many people.

I don’t regret

“We thought things through, I don’t like to improvise. But I think the income tax rate is high in Spain although I don’t regret that today.”

Other decisions, including not raising pensions by the cost of living and stripping public sector workers of their Christmas bonus, which is equal to one month’s salary, had been difficult, Mr Rajoy added.

“I think many people understand that reality forces you to take difficult decisions and it is better to take them than not doing so, especially if you want to face the future with some hope.” (AFP)

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