Author: Diego Torres
MADRID — After a long period of political uncertainty in the wake of a devastating financial crisis, Spain’s Prime Minister Mariano Rajoy announced a number of economic measures Friday.
The deal was agreed in a compromise with the Socialist opposition.
To comply with Brussels-mandated budget deficit reduction targets, the government aims to introduce a €118 billion spending cap for 2017 (€5 billion less than this year) and €4.3 billion in extra taxes for corporations.
Economy Minister Luis de Guindos said in a press conference after the cabinet meeting that the government plans to extend the 2016 budget and try to have a new one negotiated and approved by March or April next year.
He also increased the country’s growth target for this year to 3.2 percent — from 2.9 percent — set a target of 2.5 percent for next year, and said that the unemployment should be reduced to 12.8 percent by 2019, from 19 percent this year.
Budget Minister Cristobal Montoro, for his part, announced more taxes on alcohol, tobacco, and sugary drinks, as well as the introduction of new anti-fraud measures like limiting the amount of cash payments to €1,000.
Spain’s deficit goal for 2017 is 3.1 percent, from an expected 4.6 percent this year. The country has been under tight Brussels’ scrutiny after missing its deficit targets every single year since the economic crisis started.
The parliament will need to ratify most of Friday’s measures in the coming days. Rajoy’s conservative Popular Party (PP) lacks a majority in the legislative chamber, but the center-left Spanish Socialist Workers’ Party (PSOE) has promised its support in exchange for an 8 percent increase in the minimum wage in 2017 and more financial leeway for the regions this year.
The Socialists, who agreed to the new economic measures, have yet to elect a new leader after the resignation of Pedro Sánchez.
The minimum wage rise should help them tackle their critics, especially those from the far-left Podemos party which is challenging the PSOE on the Left.
These agreements suggest that the PP and the PSOE have reached a basic understanding that could help guarantee stability in the coming months — even if Rajoy’s government is defeated in Congress, as has happened in the past.