Government approves Stability Programme 2015-2018 and National Reform Plan

Moncloa Palace, Madrid

The Council of Ministers agreed to submit its Stability Programme 2015-2018 to the European Commission, a programme that reflects the recent developments of the Spanish economy, the degree of progress made in its agenda of reforms and compliance with the specific recommendations made by the European Council in June, 2014.

The Vice-President of the Government, Soraya Sáenz de Santamaría, claimed that these documents substantiate the strong recovery of the Spanish economy and present "the best economic forecasts for Spain since before the crisis began".

The far-reaching programme of reforms implemented by the government, explained the Vice-President of the Government, "means we can guarantee sound growth and trust in us meeting, and perhaps even exceeding, the forecasts". "Over the last three years, the government has implemented an extensive reformist agenda that has transformed the economy. This strategy has resulted in renewed confidence from the international markets and allowed us to increase our efficiency and capacity to compete. This is now bearing fruit", she added.

Soraya Sáenz de Santamaría underlined that the Spanish Gross Domestic Product (GDP) grew by 1.4% in 2014, and by 1.9% in the first quarter of 2015, according to preliminary figures released on Friday, which means we can say that "Spain grew by 2.6% year-on-year, the best figure in the last seven years".

The Vice-President of the Government also pointed out that over the last 12 months, more than half a million jobs have been created, of which 290,000 are permanent. Unemployment has fallen by 489,000, the highest figure for any year since 2002. Spain heads up the Eurozone in terms of lower unemployment and job creation. It has also improved figures on the creation of companies, it maintains an important trend in exports and prices remain competitive, with Spain posting 20 straight months of inflation below the Eurozone average. Pool MoncloaFurthermore, the cost of Spanish debt - the cost of financing - continues to fall. Spain is being financed at negative rates for the first time ever.

Against this backdrop, the Vice-President of the Government stated that the economic forecasts for 2015 allow us to claim that "the change in cycle of the Spanish economy is now a reality".

"The Spanish economy will grow by 2.9% in 2015, and will undoubtedly be the economy to see greatest growth from among the main economies in the Eurozone. Moreover, it will grow by twice that of many of these countries. This is a forecast fully substantiated by reality and will continue, and indeed may even improve, in the years to come. In 2016, growth is forecast of 2.9%, and in 2017 and 2018 of 3%", announced Soraya Sáenz de Santamaría.

As regards employment, the Vice-President of the Government pointed out that in 2015, more than half a million jobs will be created and that the recovery will have led to the creation of a total of one million jobs between 2014 and 2015. "With the forecasts we have submitted, we can assert that between 2015 and 2018, the rate of job creation will exceed half a million per year, such that the Spanish economy can recover its level of 20 million people in work by the year 2019. That is the national target".

According to the Vice-President of the Government, intense job creation will lead to a significant reduction in unemployment. "In all probability, the unemployment rate will fall to below 22% by the end of 2015, and will clearly stand below the figure we inherited when we came to power, and will continue to fall in the years to come to a level of about 15% by 2018. A 15.6% fall as an annual average is forecast", she said.

National Reform Programme

Pool MoncloaSoraya Sáenz de Santamaría stressed that almost all the measures committed to in 2014 are under way. As regards further reforms, the Plan for 2015 has two priorities: concluding the reforms initiated and adopting those that are necessary to boost the economic recovery, then consolidate this and translate it into job creation.

The Plan sets out the structural reforms at a European Union level that Spain considers necessary to undertake. In this regard, the Vice-President of the Government spoke about further fiscal integration, progress on the internal market in such areas as energy, the single digital market, fiscal harmonisation and the fight against fraud, and an economic policy that drives investment, growth and employment through support for investment and the Juncker Plan.

As regards structural reforms to be undertaken in Spain during 2015, Soraya Sáenz de Santamaría explained the measures to be approved in such areas as the fight against unemployment, protecting social inclusion, increasing growth and competitiveness, a more efficient public administration, responsible fiscal policy and the fight against tax fraud.

Growth close to 3%

The Minister for Economic Affairs and Competition, Luis de Guindos, described the growth forecast for 2015 as "prudent", since the latest figures from the National Statistics Institute show that the Spanish economy has begun the year at "a cruising speed" of around the 3.5% mark.

Pool MoncloaGDP will also increase by 2.9% next year, and by a further 0.1% in 2017 and 2018. Luis de Guindos highlighted that these figures will mean a return to the potential growth of our economy and, moreover, will enable the positive differential vis-à-vis the Eurozone average to be consolidated.

As regards employment, the Minister for Economic Affairs stressed that by the end of the legislature, according to the Labour Force Survey (Spanish acronym: EPA), there will be more people in work and fewer unemployed than at the start. The creation of more than 2.1 million jobs by 2018 will enable us to reach a level of close on 20 million people in work, added the minister.

The macro-economic chart that underpins the Stability Plan also contains an improvement in consumption thanks to the recovery in confidence, price stability, job creation, falling interest rates and the tax reform carried out by the government. Luis de Guindos also underlined the positive performance of the foreign trade sector and the positive balance of the current account for the whole of the period 2015-2018.

Should these forecasts be met, stressed Luis de Guindos, the Spanish economy will be able to put "the longest, most intense and most profound crisis" in modern history behind it.

Budgetary balance and lower taxes

Pool MoncloaThe Minister for the Treasury and Public Administration Services, Cristóbal Montoro, underlined that the aim of the budgetary policy contained in the Stability Programme is to continue to reduce the public deficit until budgetary balance is very nearly reached by 2018. The deficit of the public administration services as a whole will fall to 3% by 2016 and to 0.3% by the end of this period.

Cristóbal Montoro asserted that this progress is compatible with not increasing fiscal pressure, which will translate into tax reforms to reduce taxes and return the efforts made during these financial years to correct the macro-economic imbalances to society.

The Minister for the Treasury underlined that public debt in GDP terms will start to fall next year, and that during the present term of office the debt of non-financial companies and households has already started to fall.

Marketing of audiovisual rights from football competitions

Pool MoncloaOn another note, the Council of Ministers approved a Royal Decree Law regulating the marketing of audiovisual rights from the two professional Spanish leagues (First and Second Division), the King's Cup and the Super Cup. This new legislation also regulates the criteria for the distribution of revenue obtained from the marketing of these rights by the organisers.

The new legislation affects "any type of broadcast, in other words, whether live or not; free-TV or pay-TV; whole broadcasts or summaries; for a limited period of three seasons and for any market, whether domestic or overseas", explained the Minister for Education, Culture and Sport, José Ignacio Wert.

The minister described the expected impacts to be economic, in the first place: under this system it would be reasonable to assume that within a short period of time the revenue from marketing domestic rights would amount to 1 billion euros and some 400 to 500 million euros for marketing international rights, explained José Ignacio Wert.

Secondly, this would increase competition and expand television markets. Thirdly, this would improve the economic and financial control of competitions, and finally, it would increase resources for grass-roots sport and women's football.

Other agreements

• The government approves a new tax incentive aimed at investments made in the Balearic Islands, for submission to Parliament.
• The government approves the ad referendum signing of the Treaty between the Kingdom of Spain and the Principality of Andorra to avoid double taxation on income and to prevent tax evasion