Speech by the President of the Government at the Forum "La España necesaria" (The Necessary Spain) organised by the daily newspaper El Mundo

Madrid

Mr Chairman and CEO of Unedisa, Mr Deputy Chairman, Editor of the daily El Mundo, director of the Forum, ladies and gentlemen, dear friends,

I would like to begin this speech by thanking El Mundo, which has given me the opportunity to launch the cycle of speeches entitled "The Necessary Spain". Allow me to congratulate the promoters of this initiative, which averts the danger of Ortega's dictum coming true: "We don't know what is happening to us and that is, precisely, what is happening to us."

Well, talking, debating, comparing visions, proposals and targets is an enriching way of coming to an understanding between us all about what is happening. That is why this type of meetings is a great opportunity for determining priorities, sharing objectives and even, if possible, beginning to start to arrange major national agreements between key actors in politics and society. I am going to explain to you over the next few minutes how I see the future of Spain, what my project for my country is and what I am going to do help make this project become a reality. But I will try to do it in a very general way, and will then go into more detail into what you consider most appropriate in the discussion afterwards.

Ladies and gentlemen,

Nearly four years ago, El Mundo, in its normal yearly round-up, gave us a list of those who in its opinion, were the leading figures of 2011, which was then almost over. The personality of the year was the risk premium, and the enemy of the year were the Arab tyrants who had been deposed by the uprising called the "Arab spring".

As you know, after 2011 the risk premium continued to give us numerous headaches. Today, fortunately, people no longer talk about it, which is a clear sign that it is no longer a problem, or that the problem that it had triggered is already in the process of solution, or actually resolved.

With respect to the "Arab spring", unfortunately we can't say the same. The movement that democrats the world over watched with hope has not managed to stabilise a democratic model for Muslim countries. Far from the initial optimism, today we can see that the north of Africa, except for some worthy exception, is a much more unstable zone that lives under the threat of the most savage terrorism, misery and war. Four years after that jubilant start, the reality is very different than we imagined: millions of refugees put their lives at risk to flee that hell and their terrible situation proffers a daily buffeting to the consciences and convictions of us all.

Ladies and gentlemen,

I wanted to start with this reflection on what happened in 2011 and what is happening today in order to make clear the main element that in my opinion defines the world we are dealing with. We are living in a society that is undergoing a continuous and fast-paced transformation; that is the main sign of our times. Within a question of months, the risk premium entered and left our lives, while the dream of "the Arab spring" has become the biggest humanitarian emergency that the European Union has had to face in its entire history.

This is our world: crises that we never imagined force themselves before our amazed eyes with an enormous virulence; new problems emerge and are resolved in record time, new business models appear and disappear within a few years. That is what our world is: constant change and accelerated change.

We are probably not in a condition to advise our children what they should study, because most of them will work in professions that have not yet even been imagined. Health, education, security, leisure, the care services, financial services and, of course, politics or journalism... all are subject to this revolution that has stepped up the pace of our lives and our world.

That is why when I think of the "necessary Spain", the subject that has brought us here, the first thing that comes to mind is the image of an flexible, innovative, fully dynamic Spain, capable of keeping up with the pace and even to anticipate change. Either this is the Spain of the future or our future will not be as brilliant as we would wish for.

We have made a great deal of progress in this area, a great deal. Our economy has become more flexible, it has become more diversified and has gained a great deal of competitiveness, a great deal; but it is clear that it is not enough. We should demand much more: more ambition, more desire for reform, more quality in education, more presence in the world and more facilities to undertake all manner of activities.

This is the necessary Spain if Spanish people are to have the welfare they aspire to and that they deserve. That is the Spain for which I work.

Ladies and gentlemen,

Probably you or some of you have heard me say more than once that our goal for the next few years is to recover the figure of 20 million Spanish people in work. It would mean creating at least half a million jobs in each of the next few years. In other words, it is a case of maintaining the rate of creation of new jobs that we achieved in the second half of this government's term in office: in the years 2014 and 2015 more than a million jobs were created in our country.

In order for this to happen we have to maintain the reformist trend that has characterised these years. To stop now would mean deviating from the path that has made us the large European country that has grown most and created most jobs.

This is our proposal for the next few years: to continue working for employment; to foster new job contracts, promote stability and improve employability, in particular among those groups that today have most difficulties in finding a job, mea
ning those who have been looking for a job for longest or who are doing so for the first time.

We propose this target of 20 million Spanish people in work, knowing as we know that jobs do not come from good intentions or catchphrases; jobs come from reforms, innovation, competitiveness and a healthy economy. Employment needs lower taxes and all the facilities possible for entrepreneurs.

Our country has demonstrated - and this is an objective fact - over these years that it is capable of heading growth table of the large European economies. It has demonstrated it. Who would have said that in 2012! But today, in 2015 we can say that it has demonstrated just that. Now, in the same way as this is true, it is also true that to maintain this position, to head up growth in Europe, we have to remain at the cutting edge.

The most important challenge today, in my opinion, is to make progress towards a technology-based economy that thrives on innovation, in which knowledge is the best competitive value, that allows us to improve our income and not lose competitiveness. In other words, it is a case of producing better goods and services at better prices.

This is the approach needed to boost Spanish industry, to continue to gain export weight and ensure that our companies can gain in size. "The Necessary Spain" that brings us here today must be a country with larger companies and with more importance in the great global value chains.

And I'm not chasing a chimera. In Spain we have one of the best digital ecosystems on the continent. I'll give you only one example: in barely four years the number of households with fibre-optic cable has increased from 9% to 50% of the total, and there are more than 15 million access points installed; I repeat, in less than four years. The digital economy is a reality in our companies, and you know that well; in our public bodies- to give just one example, look how the National Electronic Document operates in the rest of Europe, and how it works in Spain; or look at how a child is registered in the rest of Europe and in Spain; look at how the much-maligned Spanish public administration works in many sectors, although there is still a great deal to do; and, of course, the digital economy is a reality of our consumer behaviour.

We therefore have a solid starting point to develop the Digital Agenda and take its positive effects to the furthest corners of our structure of production. To do so, to ensure that the digital economy and the single market boost the competitiveness of the Spanish and European economy and thus to contribute towards generating growth and employment, the Digital Agenda has to develop four elements that I already made clear to my European colleagues a few months ago:

- Digital platforms: As well as deploying the networks, it is important to bear in mind the whole value chain. Spanish companies must participate in the creation of new platforms and services for the telecommunications system.

- Respect for constitutional rights: We have to ensure that the progress made in services and contents on the web respect constitutional rights such as the protection of minors and the right to honour. And this respect must be guaranteed at all levels, including both operators and managers.

- Taxation: Progress has to be made so that the tax framework is not discriminatory. To do so we have to put in order the tax regime for services that are provided online. Currently, an e-book is subject to VAT of 21%, while a hard copy of the same book has VAT of 4%. These differences originate in European regulations. It is certainly paradoxical that electronic services pay VAT in the destination, while e-commerce of physical products pays VAT in the country of origin.

- Protection of intellectual property: The legal framework must guarantee that intellectual property rights are respected. This implies that the holders of these rights, those who develop the contents of books, the press, documentaries or sport, receive a remuneration that is appropriate to their creation.

The Digital Agenda also has an indisputable role in the improvement of our educational system, so that we can align its priorities better with the needs of the labour market. In this term in office we have implemented the Connectivity Plan for schools with ultra-fast broadband. This plan has a budget of 330 million euros, and will benefit 16,500 schools and six and a half million students across the country.

As you know, we have also implemented the Quality in Education Act and our new system of Vocational Training, which is beginning to give results. We are firmly determined to continue to make progress on all those key aspects that can improve the quality of education and academic results. To do so it is not enough to adjust the framework of the system. It is essential to recognise the role and importance of the work of teachers as a fundamental part and cornerstone of the system because teachers really are the fundamental part and cornerstone of its operation.

That is why we have already started work on preparing a White Paper on the Teaching Profession. The aim is none other than to define the basis for regulating the teaching profession, recognising its effort and dedication, and giving priority to professional development.

For the same reason it is also necessary to create the right conditions for a more competitive university system, with flexible management models, which is open to innovation and specialised research, internationally recognised and with the capacity to teach graduates the skills constantly required of them in the labour market.

These are the goals that must define a new Spanish Strategy for Higher Education, shared by all the agents involved, that draws a common goal capable of being evaluated.

I believe profoundly that everything that we improve in education, at all its stages, is the best thing we can do for the future of our country. And it's not a question of ending up better or worse in the international statistics; above all, it's a question of social cohesion and equal opportunities for all the people of Spain and for the future of all.

Ladies and gentlemen,

The model of production I have sketched here in bare outline is not an option. As I said a moment ago, it is an inescapable necessity if we want to continue to grow, if we want to continue to create jobs and if we want to continue to enjoy the public services we have, which are fantastic. As the chairman and CEO of Unidad Editorial said, they are fantastic.

At times we have a certain tendency to talk about how badly things are going; but in reality... Before we were talking about the high-speed trains in Spain, which is the country with most in the world except for one; about the Erasmus programme: Spain is the European country that receives most Erasmus students, the most; about tourists: it is the country that receives the second highest number of tourists in the world; about the Welfare State: there are countries that they say will compete strongly with us, and I've been to one country, as many of you have, that appears to be the second biggest in the world in GDP and its spending on pensions is precisely zero; or about the Spanish system of public healthcare, where you have to see what large countries, also very important in the world, are spending.

So sometimes we should really talk well about Spain, for many reasons; but one of them, and it is a very important one, is that you will simply be telling the truth.

In any event, we need a competitive Spain to fight successfully against the inequality generated by unemployment, and we need these jobs and this wealth to consolidate - not create, but consolidate - our Welfare State and ensure coverage in conditions of equality and quality for all our citizens.

Well, this will be the spirit that spurs the Government's proposal for negotiating the new system of regional funding: to guarantee that all the Spanish people, wherever they live, can access the same level and quality of basic public services, and guarantee sufficient funding for them.

At the same time, we want to continue to make progress in defining a tax system that favours growth and welfare, and that is also more uniform, simpler and more transparent. Both elements - regional funding and tax reform - must necessarily go hand in hand.

From this point of view, it is also of fundamental importance to continue to make progress - I repeat, continue to make progress - on the reform of the public administration, because from the start we said that it was an immense task, and believe me it is. And so far we have undertaken the most difficult part, by acting on the structure and the operation. Now we have to continue to act on the procedures and make progress to implement the new technologies, which can allow us to have a truly electronic administration, in which people will have to make minimal trips and there will be maximum efficiency, because this also helps improve the quality of public services and thus our welfare.

Ladies and gentlemen,

All these elements that I am mentioning here will form part together with others, of my party's election manifesto for the upcoming election of 20 December, which we will be presenting over the next few days and weeks; a manifesto based on the seven key elements that will consolidate our recovery:

- Progress on employment

- Sustained and competitive growth

- A stronger State of autonomous regions

- Also stronger pillars supporting the Welfare State

- Completion of the improvement to our education

- Continued modernisation of the administration; and

- An ongoing commitment to regeneration of public life

Ladies and gentlemen,

"The Necessary Spain" is based on these seven key elements because everything or practically everything is contained in them: our economy, jobs, opportunities for young people and security for the elderly.

These seven pillars mark the path towards a more society with greater cohesion and greater levels of equality between its members. Continuing along these lines we will sooner rather than later recover the levels of welfare that were ravaged by the crisis. It contains the keys to this dynamic Spain that is capable of successfully dealing with a changing world that will wait for no one.

What we have done between us all during these very difficult years is our best guarantee. The results we have obtained over these years are the finest proof that our policies were correct and the guarantee that what we propose is not hypothetical speculation, but a goal that is within the scope of our determination.

I am coming to a close.

Ladies and gentlemen,

Obviously, none of this would be possible in a Spain that was racked with instability or division. This programme for growth and employment is radically incompatible with institutional or political uncertainty, and much less so with a project of breaking with our constitutional order.

In these days we are facing the biggest challenge to our constitutional order and to the Spanish nation for decades. And I would like to make very clear from the start, that there is no reason, either in my Government's action, or in the actions of previous governments of Spain, to justify the disloyalty and constant challenge in which those responsible in the Government of Catalonia have been engrossed for some time.

Never in history, never, has Catalonia had a greater level of self-government than today. There is probably no example of decentralisation in the world as profound as that in our State of the Autonomous Regions.

In Catalonia, the Regional Government of Catalonia says that it doesn't have money to pay the pharmacies. That is nothing new. From the start of our period in government the Regional Government of Catalonia did not have money to pay for pharmacies, or to pay the debts that matured or pay the salaries of their civil servants. And that is why, in order to prevent a collapse in the system of welfare of the citizens of Catalonia, central government made contributions in an example of what I consider obligatory solidarity, of 49 billion euros through the different mechanisms of financial support.

In contrast with this behaviour, which has been loyal and supportive on the part of the Government and Spanish society, and which is the only thing that can be done by a responsible government, the Regional Government of Catalonia devoted all its energy to implement initiatives that were contrary to life in harmony and to the Constitution. Far from taking care of the needs of the Catalan people, their only priority has been to create a climate of opinion based on falsifications of our shared history.

Neither Spain nor its government, or its political parties, or institutions are responsible for what is happening there; for the scandals, for the break-up of the coalition government, for the disappearance of moderate and integrating Catalanism, for leaving the government in the hands of an openly anti-system party such as CUP.

As you know, in recent days I have been in touch with leaders from all the political parties to inform them of the Government's position and the steps we are preparing to defend constitution legality, if indeed in the end it is attacked.

I told all of them the same thing I am now repeating to you: our State also has sufficient mechanisms to deal with this situation. It's true that until now we have never had to use them, because until now there has never been a level of disloyalty by administration acting against the law on which its legitimacy is founded.

I would like express my thanks for the willingness that I have found in the different spokespersons to listen to my reasons and my arguments. Everyone knows that some political positions, above all referring to the right to self-determination, are diametrically opposed to mine, but I'm sure that I have lost nothing by listening to them.

I also believe that there is a basic consensus among nearly everyone regarding four basic key elements: defence of Spain's unity, of the sovereignty of the Spanish people, of the equality of Spanish people and respect for the law.

It appears that this is the best consensus possible; that which guarantees we can live together in harmony, protects our diversity and includes the sentiments of the vast majority of Spanish people, including the majority of Catalans.

For my part, I can tell you in advance that my commitment is to maintain a fluid dialogue with the different political parties in the future. We will be announcing the measures we adopt on each occasion, always in accordance with the assessment made by the State services and with the criteria of proportionality and prudence that we have followed at all times.

Ladies and gentlemen,

We are the Government of Spain.

We are less than two months away from the elections. I believe that the different parties that are bidding to obtain the confidence of the Spanish people can and should debate on almost everything. What we can't allow is to put into question the basic principle of the rule of law, such as respect for the Constitution and our institutions.

Those who aim to bypass the law do so because they don't have the popular support needed to change it. Let's not deceive ourselves on what is basic, or let this false discourse that contrasts law with democracy prosper. The only democracy worthy of the name is that founded on respect for the law and I will do my best to make sure it will continue to be so in Spain.

Thank you very much.

DISCUSSION WITH THE PRESIDENT OF THE GOVERNMENT

Moderator: I would like to thank you very much the large number of questions that have been handed to me. As far as I can I will try to pass them on in turn to the President of the Government.

A book has been published recently, Mr President of the Government, by Mr Ignatieff, who was a candidate for the presidential elections in Canada, in which he discusses success and failure in politics. He says that if a politician is used to moderation, when he then needs to use courage, he doesn't know how to do it. That is reminiscent of the metaphorical story of the centipede who is asked "how do you deal with 100 feet at the same time"; it can't explain and becomes completely paralysed. Do you believe that in the case of this use of prudence to which you refer, if a decision with a certain political risk has to be taken, the President of the Government would be prepared to assume such a risk with respect to Catalonia?

President of the Government: I've read the book you're referring to, in fact I've also given it as a gift to a journalist, Mr Bustos, who had sent me one he had written. In my case, I didn't write it, of course, obviously.

Yes, he was a candidate for six years for the Liberal Party in Canada and didn't win the elections; the winner was the man who was President until just now, the conservative Harper, who lost against Justin Trudeau, the son of another president of the Liberal Party in Canada. I've read the book and the book says many things. It is very important to understand what this man says. He is undoubtedly a person... a professor in one of the leading universities of the United States. He talks about many things, the book is very illuminating, and I would recommend it. One of the subjects it deals with in most detail is how politics are seen from within.

This is someone who talked all his life from outside and commenting, now says: "I've changed my opinion about what politics is like from within, about what leaders are like and about how judgments should be taken." And he said that, despite having lost the elections and then withdrawing, it had been a very enlightening period.

Basically, it's one thing to give an opinion and another to take decisions; both are very important. But there are some people who have opinions and who are more involved in giving opinions and influencing people, saying how they see things, what they think, and that's a very important task; and there are others who have to decide, which is also a very important task. I don't know which of the two is more difficult.

Moderator: With respect to what he says on when someone becomes accustomed to prudence, and then is not capable of using courage in certain circumstances, do you believe this disqualifies you? And related to this, I would like to know, Mr President of the Government, whether the policy of playing down the pro-independence movement, nationalism, has not failed.

President of the Government: Look, this can be summed up in the fashionable word "immobilism". Of course, to say to a Government that has implemented a fundamental law on budget stability; that has lowered the deficit by nearly 5% while in recession; that has implemented a labour reform; that has restructured all the banking system in our country; that has carried out an electricity reform; that has reformed education, that has carried out a reform of the public administration, that has implemented a law on market unity... You can say what you like to the Government - "look, what you've done is really bad..." but the only thing you can't say is that this is a Government that hasn't taken decisions.

There are two issues here. I've been proposed two things. First, there is the Fiscal Pact. The Fiscal Pact is a system like the Navarre agreement or the Basque agreement. I said that I was not going to present it to Parliament, but I had nothing against the person who was asking me taking it to Parliament and letting Parliament decide. The second proposal was that I should authorise a referendum that affected national sovereignty. I said no for two reasons: first, because I didn't agree with it; and second, because national sovereignty is not the property of the President of the Government, or of the Government, or even of Parliament. It is the property of the Spanish people as a whole.

So these are the two decisions that I have had to take on this matter. If anyone would have taken different decisions in this case, they can defend their opinion publicly, but I think that I did what I had to do.

Moderator: You have referred to these minima agreements with different political parties. Do you consider that this pact should be translated into a document in line with others that have been signed over the recent history of the democracy by parties to avoid major problems, as was the case at the time with terrorism; in this case, with the pro-independence challenge?

President of the Government: I believe there is a document in place that is very important, and that is the Spanish Constitution. That really is an important document. It is a question of complying with it, plain and simple.

Yes, I have had a round of talks with all the political parties. Of course, now when there is talk about some reforms that have to be carried out, believe me it is not easy to get everyone to agree, because I have met with people who want to get rid of the principle of national sovereignty, who want a referendum on self-determination. I have listened to them very carefully and I don't agree. That is why when I say that there are four points on which we all agree - it's not actually all of us, we form a majority, but it's not all. They are: national unity, national sovereignty, equality for all Spanish people and compliance with the law.

So I believe that as for signing or not signing a document, frankly I understand that there should be a debate on this matter, but it doesn't appear a key issue to me. The key issue is that there are some political parties, which are a majority, that have transmitted two messages to public opinion: one, that we agree on the basic issue, in other words, on what Articles 1 and 2 of the Spanish Constitution say; and second, that we are going to act together, in line with how the Government must obviously handle the question.

What political parties can't do is to start to debate whether it is good to appeal this or not to appeal, wait three days, get it right.. Look, let's get to the major and fundamental issues, and let's not get tangled up in these subjects.

Moderator: But can't all this laudable - in my opinion - movement to bring together all these political parties end up as nothing more than a mere facade, in the sense of behaving as if things were being done, but in actual fact nothing is being done about this issue?

President of the Government: Not at all. I assure you that the Spanish Constitution in this country, in Spain, will be respected; and I believe that I have the support, any Government of Spain that is in power at the time has the support, of a majority of political parties that represent a majority of the Spanish people.

Moderator: Isn't the Government neglecting its duties and putting the burden onto the Constitutional Court in relation to the pro-independence challenge? The question is, what do you believe the decision taken by the court on the pro-independence challenge could be?

President of the Government: I don't think that it would be very correct for me to think about what the Constitutional Court will or will not decide. What I can tell you is that if this project for resolution is approved in the Catalan Parliament, I, the Government, will appeal it, to the Constitutional Court the next day or a couple of days later. I believe, but I don't know, that the Constitutional Court will act in accordance.

But the Government has never abdicated its responsibilities and will not do so now.

Moderator: Taking into account that the last document that the Catalan Parliament approved, or is trying to approve, talks of severance and of not respecting any decisions by Spanish courts, what will the Government do in this case if the Regional Government of Catalonia does not obey the Constitutional Court?

President of the Government: The second part - let's see if I can explain it in more detail - of the agreements we have reached with the most representative groups at this time, and in particular with the Spanish Socialist Workers' Party (PSOE)... First, we agree with the basic issue and that reassures us all; second, I will discuss the decisions that the Government has to take with the political parties, at any rate with the main political parties. Now, it makes no sense to get ahead of ourselves and say what will happen if something that perhaps will not occur, happens. I believe that we have tried to proceed by maintaining continuous dialogue, but to not say every day what we are going to do if this or that event occurs.

At this point in time, the only decision we have taken is to appeal the resolution, because we are aware that it will be presented and a plenary session will be held to discuss the matter.

Moderator: In the meetings with political parties has there been a response that has surprised you or disappointed you; or have they been in line with what you expected from the Socialist Party, from Ciudadanos, from Podemos, or from other parties, UPyD and Izquierda Unida?

President of the Government: No. I have to say that all the talks were cordial; but, cordiality apart, which is something that is linked to good manners, on basic subjects I believe that things have gone well, except for two political parties that do not agree with national sovereignty because they believe that you can have a referendum on self-determination, even though they would vote against independence.

In other things, I have felt encouraged and I believe that we are all going to act together, with prudence and proportionality. I want to make this point clear because, when there is an event of this nature, everyone has their own opinion. There can be one opinion, another and twenty-five, and all of them can be different; but of course it is the Government that has to lead this process with the greatest support possible from the political parties. I would ask for support for this consensus between Government and the majority of the political parties.

Moderator: I would like to ask you if the fact that you have taken over control of the funds for Catalonia is part of the strategy to check the separatist challenge.

President of the Government: But I'm not taking over control of any fund for Catalonia. Frankly, that's not the case. I'll explain to you how this question of the FLA (Regional Liquidity Fund) and supplier fund has worked, because I believe it's important that we should all be clear on this point.

When we came to government, as well as some things that you know, there were some autonomous regions, initially two, that were not paying their suppliers, and couldn't pay them; they couldn't meet their debt maturities and they couldn't finance their public debt. To put it in another way, they would have been bankrupt if the Government of Spain hadn't acted, and obviously the Government of Spain acted, first with ICO credit facilities and then in the end we saw that wasn't enough and we created the FLA and the Supplier Payment fund. We have spent 150 billion euros of public debt, because the alternative was simply bankruptcy.

What is the FLA, or Regional Liquidity Fund? It is money that the Government grants to some regions to take care of their debt maturities, because if not, they can't, or to pay their suppliers; among others, there was 16 billion euros of debt of the Spanish health system. The money was simply not paid; that was the procedure that was used in this case.

We've arranged that, and we have prevented bankruptcy. The regional governments could not finance themselves and now they are financed at 0%, because the State also receives very cheap finance and because we believe that this is a good way of arriving at a final solution, which is that the regions can also have recourse to the markets.

Moderator: But the fact is, Mr President of the Government, that everyone understands this but perhaps what they don't understand is that...

President of the Government: No, not everyone understands it.

Moderator:... these funds have been used to finance a new State.

President of the Government: No. That's not true.

In the debt maturities, not a single euro enters the budget of any regional government; they are simply assumed by central government. The suppliers? Now the suppliers are paid directly because, of course, how can a person who lives in some part of Spain be to blame for what his or her government does, as a supplier...

Moderator: In other words, is the Government sure that the Catalan Government has not deviated funds from liquidity to set up the structures of the State?

President of the Government: No, because the debt maturities do not pass through the Regional Government of Catalonia, because the suppliers are now paid directly on presenting the invoice, and because the excess deficit must be justified with documentation. They have basically dedicated themselves to issues related to the Third Sector, issues of dependency - more than 3 billion euros - and health issues.

What we cannot have is a country where those who supply the government do not get paid. In the area of healthcare the average payment period was 513 days when we came to government. I understand that there are people who perhaps like to punish a citizen who is not to blame for what his government does; but that can't be done. In addition, it creates huge damage to Spain. The bankruptcy of an autonomous region would be enormously negative for Spain, for our credibility, for our borrowing and for our risk premium.

Moderator: Where would the red line be for intervention in the region of Catalonia?

President of the Government: There is no sense, as I have said, in anticipating events, but you are completely and absolutely right that there is no doubt that the Government, if it has to act, it will act and will not rule out any of the instruments that are provided for by law, among other things because they are provided for by law. But you will agree with me that the best thing to do would be for us not to reach this situation.

Moderator: Are you prepared to reform the Constitution and in what terms?

President of the Government: I love this discussion about reforming the Constitution, and I will tell you how things stand at this point in time. Right now we can, it's true, initiate a process for reforming the Constitution, and I am aware of three points of view. The first is of those who want to undertake a profound reform of the Constitution. They want the right to self-determination, in other words, to do away with national sovereignty. This will include some nationalist parties, Podemos and Izquierda Unida, because they've said so.

That is one position; then there is the position of others, who perhaps could say quite the reverse. Yesterday that is what UPyD told me: what we are aiming at is that powers have to be withdrawn from the regions; and then there are those who want to carry out a federal reform, but are unable to explain what a federal reform of the Constitution is, plainly and simply, because it's not possible to carry out any federal reform because the regional State is at the end of the day, a federal model.

And then there is the position of our party, and that of many people in other parties whose leaders may say something different, which is: we're going to act calmly, a reform of the Constitution means you need to know precisely what it is we want to do and how much consensus we have, and at a time when there is no political problem such as that we are experiencing at this time. I will always be in favour of a reform of the Constitution. I have been involved in two: one that took a quarter of an hour, when the President of the Government Mr Rodríguez Zapatero called me in the summer of 2011 to say that we had to carry out a constitutional reform, setting a limit to the public deficit and debt. And within a quarter of an hour I said yes.

Of course, carrying out a reform of the Constitution without people being precisely clear what has to be done... I certainly believe that at this point in time the Spanish Constitution is a text that is fully in force. It can be changed. I know that there are things that can be changed: you can name the autonomous regions; you can say that all the European regulations are going to affect us - they already affect us, but this can be incorporated; you can resolve the subject of the succession to the Crown, that can be done... But if we talk about the territorial subject, I at this time don't believe that the conditions are in place.

Moderator: If you, Mr President of the Government, needed the votes of Convergència to be President of the Government, would you be prepared to take that step?

President of the Government: I won't do anything against the Spanish Constitution, and against my convictions. You can ask a lot from me, but things that go against national unity, national sovereignty and the equality of the Spanish people, and for me to say that it is wonderful for someone to break the law - don't count on me for that.

Moderator: There is a cliché that says a leader in government generally has two piles of papers, right? There are the issues that time resolves and here we could include the economic crisis, as some people think, and other issues that can't be resolved, that are not resolved even with time. This would include Catalonia, with the situation that we can see in which the Ortega's peaceful coexistence has now been shattered. Do you consider that you can do something similar to what Churchill did: win the race against the economic crisis and lose the elections?

President of the Government: That is something for the Spanish people to decide. I'll try to convince them that it is good for our country that the project implemented by the People's Party four years ago in what was a terrible situation should continue in place.

I don't agree with some of the clichés that say that the economic situation resolves itself alone, because of course in 2012 we were the sick man of Europe, the recession was more than a negative 2 points, 1,400 jobs were lost every day; we were at the brink of bankruptcy and everyone said that we had to be rescued. And now look, in 2015 we are the fastest growing of the major European countries, we are the European country that creates most jobs and the risk premium, as I said before, is now something in Spain's history.

And furthermore - and it's good that it isn't so - there are two forms of government: good or bad; it's not a question of policies about which you say... There are good and bad, and when you control the public deficit, with all the problems that this generated for all the Spanish people, you gain credibility, and when you make structural reforms, you gain credibility. That is why foreign investment has increased, and that is why I can now tell you what my arrival in January 2012 in Europe was like and what Europe is like now, remember not long ago all the major European leaders came to our country.

Thus implementing good policies and taking the bull by the horns is good and positive, but there is one virtue that is very important in life, and that is prudence and proportionality. It is very important in life and, above all, in a political leader it is more important than for any other person, because, as I say, when you are expressing an opinion, well, of course you are freer, because in the end you don't have to take the decision, which is what produces real results.

Moderator: In fact some of the general criticisms made about you are that you were totally obsessed by the seriousness of the economic situation, that you forgot about politics, and that has created a significant disappointment among your own supporters; and above all - these are the questions - your slowness in taking measures against corruption in the People's Party have caused you an extremely serious political and electoral problem in your party.

President of the Government: I was obsessed about the economic crisis, you can believe me that was true. I was absolutely obsessed, of course, and if I hadn't been obsessed, I would have been absolutely irresponsible. Yes, there are people who say: "Rajoy only cares about the economy." But what is the economy? The economy means that people have jobs; the economy means that people have a wage with which they can make ends meet; the economy means that you can have revenue because there are people working to maintain health to maintain education and social services, to make trains, to make roads and motorways... The economy means that people are paying into the Social Security system because they are working to maintain the system of pensions that we have. It means people's lives.

How could I not be obsessed by it! We were on the verge of being in the situation of Greece, where they were forced to cut pensions by 10%, or what happened with the civil servants. I would have been irresponsible! I know that this is one of the criticisms that are made of me. Yes, I've been obsessed by the economy because it means people's lives, and I am still obsessed by the economy; because, although things are now developing favourably, the situation is not yet completely overcome. The goal is to grow at 3% every year for the next four years and then we will be able achieve those two million jobs more that Spain needs at the present time.

Having said that, with respect to the subject of corruption, this issue, I believe, has really done a great deal of harm to my party and it has done a great deal of harm to me as a political leader. I think that it has done me more harm than the economic measures we have had to take, because most people understand that was something that had to be done, because if not the country was going bankrupt. But I think that we have taken measures.

First, the Public Prosecutor, the courts and the Tax Agency, the Customs Supervision service and the judges have acted with absolute independence and have taken many measures that have affected many people: some of them linked to the Government, even active party members, and others not. Second, we have presented a very important legislative package, the first of its kind in history. The latest decision we have taken is to construct the special Office, among other things because the courts can't keep up. Its purpose is to recover funds that are the result of criminal activity, as people often say: "It's not enough that someone should be subject to the Criminal Code, we have to recover what he has stolen." That is what people say and that is the way it is easiest to understand.

We opened the Office not long ago, we have taken many decisions and I am absolutely convinced that all this will produce results in the future. In any event, I believe that in this I should have been more diligent.

Moderator: Shouldn't you have made a gesture something like Blair has just done with respect to the Iraq war, a confession in the sense that some things were done badly?

President of the Government: The question of the Iraq war took place...

Moderator: I'm referring to the attitude to corruption, a gesture offering an apology or admitting that you were wrong.

President of the Government: I've apologised. I've had what were some really tough debates for me in the Lower House and I have always responded to all the parliamentary initiatives that were proposed. Of course, at times one has the feeling that the aim is to have this issue permanently on the table so that nothing else is talked about; but, well, that is another matter.

Moderator: Ciudadanos has proposed a maximum rate of income tax of 43%. Will the PP's proposal be more ambitious?

President of the Government: Yes. If it were for me, I would cut it much more, in fact. What's more, I think it has to be under 43%. I'll tell you something because, of course, proposing is very easy, but... I was sworn in as President of the government on 21 December 2011 and on 30 December I increased income tax for all the people of Spain. It went against what I thought, what my Government thought, which increased it, and what we had said during the election campaign. We did it for reasons of responsibility, because there was no other alternative. Now in 2015, we have cut income tax. And we said: half of the cut in 2015, the other half in 2016. Now as revenue is increasing - and it is increasing - we have moved forward the 2016 cut to July 2015, and even so it's increasing. It's true that revenue from VAT is increasing much more than revenue from income tax, but it's still increasing.

But my conviction, and what I believe has to be done, is to cut direct taxes again. We have also cut corporate tax, but both corporate and income tax have to be cut again. However, for this you have to have economic activity and the government has to be collecting revenue.

Sometimes we don't realise that in 2012 and much of 2013 we were living on the brink in Spain. There are chairmen of major corporations here who tried to get finance from the markets and they weren't given finance, and not because they were tinpot companies - they weren't, in fact quite the reverse - but because of the Spain brand in 2012. Sometimes it seems to me that we don't realise that; but it is in situations of difficulty and in extreme situations when a leader has to decide, and at times not to decide.

Moderator: There are questions asking why you didn't repeal the Historic Memory Act and have kept some other measures from the previous government of Rodríguez Zapatero in place.

President of the Government: Historical Memory? The budget allocation in the four budgets this Government has passed - or five - has been zero. The average is zero because it was zero every year. And this issue has not generated much debate here.

Moderator: There are various questions related to the electoral lists. They ask what message you would pass on to the members of parliament who are waiting anxiously to see if they will once more be on the lists. And there is another more specific one that asks whether the general secretary Maria Dolores de Cospedal will be included on your list for Madrid.

President of the Government: Drawing up electoral lists, at least for me, is, I can assure you, the most difficult thing in political life. In other words, all these things that affect people... I'll tell you a story, if you allow me, and I'll tell it quickly. I was president of the Provincial Government of Pontevedra when I was 28 - now they say that as I have been around for many years, you have to make a change, but that is for people to decide - I was there when I was 28 and we had to appoint the members of the Board of Trustees of the Museum of Pontevedra. At the time I had to appoint four and there were eight mayors; I had to name four from these eight. What reason was there for choosing some and not others? The knowledge they had of subjects related to the Museum was similar, that of the eight who were there. Well, I realised that this was... For me it was much more difficult, it is much more difficult, than any other decisions that may affect the governability of a country, although they may be more important.

This is very difficult for me. What can I tell people? That we'll try to make the right choice. I haven't concerned myself much with the lists, they are more concerned with that over there in the People's Party. But we'll try to make the right choice. I believe that people have done it well. It has been difficult to be a member of parliament for the People's Party parliamentary group over these years, because of course they were difficult years and they have had to support tough decisions, and many people have had a difficult time of it, above all in 2012 and 2013. We'll try to get it right and we'll try to do things well. Can we make mistakes? Of course we can.

Moderator: Do you consider you are the best candidate for your party at the next general election? Have you been tempted to throw in the towel at any stage of this Government?

President of the Government: You can't present things like that. If I thought there was someone who was much better than me, then I would say it should be him or her, but I'm not in that situation.

And I never throw in the towel. The last thing that would occur to me in a difficult situation would be to abandon ship. I've never done it in my life and I'm never going to do it. And believe me that I've lived through some moments that were manifestly in need of improvement, as they say of abandoned properties.

Question from the public: Why do I have to make contributions for 35 years to have a 100% pension and you not only have excessive privileges, but by contributing for only seven years you have the right to the maximum pension?

Question from the public: Mr President of the Government, I'd like to ask you if you would be prepared to reform the Constitution so that all the autonomous regions had precisely the same powers and the same tax regime.

Question from the public: I would like to ask Mr Rajoy what he meant when he sent the text message to Mr Bárcenas saying "Luis, be strong, we'll do what we can."

President of the Government: That man's from Pontevedra and a friend of mine. Like any human being, we make mistakes.

With respect to the question about pensions, that isn't true. Sometimes things are said and people believe them, and why shouldn't they believe them if they see them written down? But it's not true. This is a procedure that was in place and that, above all, was applied to people who returned from exile - there are some with well-known names - who had not been able to make contributions because they hadn't contributed in their lives, and so in that case if they were members of parliament for seven years, their pension was topped up. That provision was removed in 2011 with respect to the future, but was maintained, but I can't swear to that, for those who had already been members for seven years. So this rule has now been removed and its origin is what I referred to.

The second question that you asked is whether I would be prepared to make a reform of the Constitution so that everyone has the same powers. I know what the question is referring to. It's not a question of everyone having health and education. It's the issue of the Basque Agreement and the Navarre Agreement and the proposal of a Fiscal Pact for Catalonia.

The Agreements are in the Constitution and they were approved by the immense majority of the Spanish people in 1978. They were extended to Vizcaya and Guipúzcoa because, as you all know, in Franco's time this tax regime existed in Navarre and in Álava; then it was extended to the four provinces. It's a different system, but it is, as I said, included in the new Constitution of 1978.

Everyone can have an opinion about this and there are many people who say that it should be changed. I don't think so. I'm not in favour of changing it. It's a rule that we set ourselves at the time. At the time of the Constitution of 1978, everyone gave some ground in everything, because there were people who were not in favour of regional autonomy and accepted the State of Autonomous Regions, and there were others who probably wanted to go further. We all said: we're going to create a project for living together and we're all going to give some ground in our proposals.

I think that opening up this debate now doesn't lead anywhere. I told you earlier that to start now to discuss the proposals of people who are asking for the right to self-determination and are going to destroy sovereignty; of others who want to do away with the system of the Navarre Agreement; of others to remove powers from the autonomous regions; of others to give them more... That's why I believe that this is not the right time for these things, nor is there any need, nor an urgent necessity; but of course, people can have an opinion on all this. And I stress one thing: if someone has an idea that he believes everyone agrees on and that has strong majority support, I am prepared to listen. Despite what some people think, I like to listen because I learn a great deal.

Moderator Thank you very much.