Speech by President of the Government at event commemorating 29th anniversary of newspaper 'Expansión'

Madrid

Your Excellency the President of the Regional Government of Madrid, public officials, CEO of Unidad Editorial, Madam Director of 'Expansión', ladies and gentlemen,

A very good day to you all.

It is an honour for me to address all of you at this new anniversary of the newspaper 'Expansión'. Thank you for attending this meeting and for your participation, each one in his or her own area of responsibility, in the collective task of securing Spain's recovery.

As we have been reminded here today, 'Expansión' was born shortly after the arrival of democracy in Spain. It was one more project that sprung up in the Spain of that time which, to a great degree, sought to be like the Spain in which we find ourselves today: a modern country, that is open and fully European - I would remind you that last week we commemorated the 30th anniversary of our accession to the European Union - a country integrated in all the major international forums and with thriving companies that successfully compete in markets throughout the world.

Today we celebrate 29 years of history of 'Expansión', and hence we also celebrate, in some way, a period which, despite the crisis we have gone through, coincides with the best years in our recent history.

I would like to take this opportunity to congratulate Unidad Editorial and the management team here at 'Expansión', because the pages of this paper have always committed to the modernity of the country, to the liberty of enterprise, to legal certainty, to innovation, to driving through reforms and to the defence of effective and strict management of public affairs.

For all these reasons, 'Expansión' is a newspaper at the height of development attained by the Spanish economy and companies over these years. Moreover, today it is a herald of recovery of our country, in the same way as it bore witness to the worst crisis Spain has undergone in generations.

Precisely for this reason, after what we have gone through in the last few years, it is difficult not to celebrate each positive figure reflected by the Spanish economy. Today, for example, we have seen the unemployment and National Insurance contributor figures for the month of June: 94,727 fewer unemployed and more than 35,000 new contributors to the Social Security system. In both cases, they are the second-best figures recorded since the start of the crisis and confirm the recovery of the job market: unemployment is falling at a little over 7% per annum, particularly in the private sector, while NI affiliation is growing at a rate of 3.5%. Since the start of 2014, 898,000 more people have starting contributing to the Social Security system. Indeed, there are now more contributors than at the start of this term of office.

Ladies and gentlemen,

Job creation is the best indicator of the changes being undergone by Spain in the last few years. Now that elections are approaching, the whole world is talking about change. Change is the magic word: people are talking about tranquil change, serene change, sensible change, changing the model… Well, I should tell you that, from my humble and modest point of view, the real change, the one that was urgent and imperious, was the one that took place with the victory by the People's Party at the end of 2011. That was the day that things started to change in Spain. The change started then, with new teams, new priorities and new policies; but it is only now that we have a certain outlook and objective figures to assess the work we have carried out.

I am not going to bore you with figures that you are more familiar with than me. I only want to sketch out what was happening in Spain when we came to power:

• Activity was falling sharply and companies were closing in their thousands. In consequence, unemployment shot up: in the last year alone of the Socialist term of office, it increased by 585,000. The unemployment rate in Spain went from 9.6% in March 2008 to 22.6% in December 2011.
• The loss of competitiveness of the Spanish economy led us in 2007 to become the second-placed country in the world with the greatest foreign trade deficit. This loss of competitiveness of our prices was growing by more than those of our peer countries in the Eurozone, a situation which, despite the crisis, still persisted at the end of 2011.
• The public deficit in 2011 stood at almost 9%; in other words, three points higher than the budgetary stability set for that year.
• In addition to all of this, the financial sector was not performing its function correctly and was a source of instability and loss of confidence for the country as a whole.

This was the panorama facing us just three and a half years ago. You know this is no exaggeration. This is what we were facing back then.

So, let us look at what the situation is today.

• The Spanish economy has grown by 0.9% in the first quarter and, in the second quarter that has just finished, the Bank of Spain has announced that the figures will be better still. According to the European Commission, Spain is the country that will grow the most of all the major European economies. For these reasons, in the near future - in this month of July - the government will upwardly revise the growth forecasts for 2015 and 2016. The new GDP growth forecast will be 3.3% for this year, compared with 2.9% in the previous forecast, and 3% for next year compared with the initial forecast of 2.9%.
• Jobs are being created steadily and increasingly, as was substantiated by the figures announced today. Whilst more than 400,000 jobs were created in the whole of 2014, National Insurance affiliation has already increased by 480,000 in the first half of the year. That is what today's figures show. In other words, our target of creating 1 million jobs between 2014 and 2015 is clearly within reach.
• We have spent the last 21 months improving our level of competitiveness vis-à-vis the main Euro economy, which as you know is Germany. In other words, our level of inflation has been lower during this time than the main economy in the Eurozone.
• Exports currently represent 32.4% of our GDP, a higher figure than that posted by the United States, the United Kingdom, Japan, France and Italy. Moreover, we have spent the last two years with a foreign trade surplus and the forecast is for that to continue this year and indeed for the next three years. That is a true change in the Spanish economy!
• This year, the budgetary stability target established by the European authorities will be met, the same as in previous years.

I could speak to you about other figures, such as the number of international investors, the creation of companies, the number of car registrations, retail sales, or even the recovery of the housing market, but I would only repeat what I want to make clear in this part of my speech.

And this idea is that fortunately, Spain today has nothing to do with Spain back in 2011. That is the fundamental change that has taken place over the last three years. That is the change the Spanish people wanted, the change that the Spanish people have brought about and the change that we must now consolidate. That is the change that our European neighbours and all the international observers and investors have seen. That is the change that the newspaper 'Expansión' has been telling us about day after day. In short, that is the change we must persevere with so that all the jobs that were shed during the crisis can be recovered as soon as possible.

Ladies and gentlemen,

Is what I have just said triumphalist? I don't believe so. Does this mean that we have resolved all our problems? Absolutely not. Are we in the best position possible? Of course not. However, we are undoubtedly in a much better position than that which we found ourselves in four years ago, but we are still a long way off - I repeat, a long way off - from where we want our country to be.

To be satisfied with what we have achieved or feel that our reformist task is concluded would be worse than irresponsible; it would be tantamount to endangering everything we have achieved during the course of this term of office, and for that reason, I will not do that under any circumstance.

In terms of reform, to stop now would be tantamount to going backwards and losing all the ground conquered. The recent history of Spain can teach us something of this.

Ladies and gentlemen,

I want to tell you something else, my opinion: this change in our situation has not come about by chance, it is not because of an aligning of the stars or a magic spell. External factors, basically oil prices and the exchange rate have undoubtedly helped us, but only since last autumn, in the same way as at the start of the term of office this worked against us.

So, the change has not taken place because of external factors, it has been our compatriots who have brought this change about, based on hard work, responsibility and initiative. The merit for this belongs to everyone and no-one has shied away from this collective effort, the fruits of which are starting to be gathered now.

The government only took charge of setting the right priorities and policies that were urgently needed to be set in motion in order to turn the situation around. We did this with determination, but let me tell you something else: we also did this by taking into account the wise words attributed to Antonio Cánovas del Castillo, "politics is the art of applying that part of the ideal that circumstances make possible". Because, ladies and gentlemen, at these times we have learnt something of extremes.

Basically, our work focused on four lines of action: guaranteeing the sustainability of the public accounts, cleaning up our financial system, undertaking urgent reforms that our productive system needed - among many others, the labour reform, the energy reform, the market unity reform and now, the tax reform; I won't bore you - and then, fourthly, doing battle in Europe to also achieve greater economic integration at a European level to foster growth in all our Member States.

I say this because we have also worked hard in Europe for things to change and now, despite the turbulent times we are currently going through, we can also see how much progress has been made in the last three years. We now have a Banking Union, we have the Fiscal Compact and we have an active policy on the part of the European Central Bank. This progress is helping us to overcome the tensions of recent days. Moreover, as was seen at the latest European Council, we continue to work on new and better integration mechanisms towards more Economic Union, towards the Fiscal Union and towards a Political Union.

Ladies and gentlemen,

Having reached this point, I believe it is important to reflect and answer a question. Will Greece remain in this union? I hope so and I wish to see this. But, in the same way as I say that, I also say that this decision is in the hands of the people of Greece at this time.

Being a member of the Euro has guaranteed Greece financial assistance from the Member States of the European Union for an amount of more than 200 billion euros, or 90% of its GDP. Of this amount, more than 26 billion euros were committed by Spain, in other words, by all of you. It cannot be said, with even the slightest respect for the truth, that Europe has not been supportive of Greece. We would all like to be given a loan where we start to pay the capital off at 30 years and the interest at 10 years, and those are precisely what the conditions are.

But the Euro is not an a la carte club. It has rules and regulations that oversee the very survival of the Euro; rules which are applied flexibly but which impose obligations on all of us. In other words, European solidarity is based, as it can only be, on the responsibility of one and all. If the second one fails, you simply cannot have the first one.

Over the years Europe has managed to implement a political and institutional architecture that was quite simply unimaginable when we started to lay the foundations. That can only be achieved through responsibility, through a desire for consensus and a desire to reach understandings. This European spirit has room for discussion, even for internal and heated discussion; what there is no room for is unilateral decisions or policies based on 'faits accomplis'.

Sunday will undoubtedly be a key date in the history of the Euro. We all want and hope that Greece remains on-board this great political project, but what cannot be considered an option under any circumstance is a unilateral breach of the rules of the single currency, which would effectively amount to doing away with it.

Finally, on this issue, I would like to say something else. The uncertainty of these days is being felt somewhat in the markets, although today Spain has managed to place 10-year bonds at lower prices than in the last issue, but it is being felt. But, just imagine what the situation would be if we had not corrected the imbalances that existed four years ago. That is why we can now say the following: whatever happens with Greece, the Euro is here to stay and Spain will play an important role in its future.

Ladies and gentlemen,

Let's speak now about the future. With all the prudence and realism in the world, I am in a position to assure you that, if no-one comes along and stops the changes we began back in 2011, we could be looking at the longest expansive cycle in our history, because the bases have now been laid for a new, healthier, better balanced and hence, sounder model.

The Spanish economy can grow while reducing public debt. As from next year, the public deficit will stand below 3% and we will start to reduce our very high level of debt.

The Spanish economy can grow with moderate inflation, unlike what has traditionally occurred in our country in which periods of growth were always accompanied by higher price rises than those of our peer countries. What is happening at the moment is just the opposite: we are growing more but our prices are moderating. The aim is to maintain this situation and we must all commit to this.

The Spanish economy is growing without borrowing from abroad. Spain could maintain its foreign trade surplus until 2018.

That is the new Spanish economic model: we are growing because we are producing and exporting unlike what happened in the past, when we only grew through becoming indebted in order to buy what others produced.

The challenge facing us now is very clear: to consolidate this model, to avoid backsliding and to extend its benefits to the greatest possible number of Spaniards.

Ladies and gentlemen,

That is the challenge we have assumed for this election year: making progress in this process of change or finding ourselves sliding back. As far as I am concerned, as President of the Government and as President of the People's Party, I am going to do everything within my grasp to continue consolidating the recovery that is now underway.

That is my main goal at present, in the same way as my priority at other times was to overcome the risk of the Spanish economy being bailed out and to undertake essential reforms. My priority and responsibility now is to do what is needed for Spain to continue to implement policies that foster growth and job creation.

As you are aware, the Spanish people have gone to the polls in two general elections: the European elections last year and the municipal elections back in May. On both occasions, although some still don't seem to have realised it, my political party, the People's Party, was the party most voted-for by the Spanish people. On both occasions we won the elections, and we did so despite the crisis, despite many unpopular measures that we were forced to take, despite our mistakes, many of which we have undoubtedly made, and despite the harm that the intolerable behaviour that some people who claimed to be our colleagues have caused to the image and credibility of our party.

We won, but we lost a great deal of support. The people of Spain have sent us a message and it is our obligation to interpret this message correctly and act accordingly.

Spanish people have maintained their trust in us, many of them, but they want us to do things better, and they are right to say so. They want us to be more forthright in fighting corruption, more sensitive when tackling problems such as exclusion and inequality, more humble when responding to complaints and probably more convincing when it comes to proposing our national project.

And they are right. It is not a question of changing policy, because the Spanish people are still demanding policies that lead to growth and job creation. Hence, in the main we will continue with the principles that have guided us over the years: seriousness in the accounts - that is key - reforms and support for entrepreneurs.

And since we are a serious government, we will present and process the General State Budget for next year. It is what is right and what Spain needs. This Budget will be the instrument to instil security in the Spanish people, the various economic agents and the markets.

We will continue to govern until the very last day of the legislature, and I am now in a position to bring forward some measures that we will approve this very month whilst putting the final touches on drafting the Budget.

As I said some time back, as economic activity and job creation speed up and we increase the margin in tax revenue, this margin can and will be used to extend the tax reductions that began at the start of this year.

So, given the current state of the execution of this year's Budget, the government will bring forward to 1 July this year - to yesterday - the reduction in Personal Income Tax which was due to come into force on 1 January 2016. The second part of the reduction in this tax will thus be brought forward six months. This will lead to an additional income to taxpayers of some 1.5 billion euros this year to be applied to salaries with effect from 1 July. In other words, all workers will see a reduction in the withholding tax on their salaries, just as they did in January of this year.

Moreover, the Personal Income Tax withholding tax rate of 15% will be extended to all professionals, whereas to date it had only been applied to those on incomes of less than 15,000 euros p.a. This will thus improve the liquidity and ability of taxpayers to invest in their professional activities.

On another note, the People's Party has started the work on the Convention regarding which we will extensively and ambitiously debate the work that will constitute the main pillar of our proposal to the Spanish people.

The first issue will undoubtedly be employment. Our aim and our goal will be to reach 20 million Spaniards in work and contributing to the Social Security system by the end of the next term of office, and the figures we have seen in recent months back us up in this task. If we managed to create 1 million jobs in the second half of this term of office, our ambition must be to create another 2 million jobs in the next term of office.

This must be the main national objective. This is what the people of Spain need, since there are still too many people out of work and it is what the country as a whole needs in order to guarantee pensions and public services. I am going to do my utmost to this end because there is no greater or more noble political task than for Spain to once again become a country with jobs and opportunities for one and all.

Ladies and gentlemen,

Although job creation is undoubtedly the main factor of social integration - the main one - and in the fight against exclusion, and the lack of jobs is the main cause of inequality, we are also going to work towards reducing other areas where inequality prevails in Spain. It is not only a question of attacking those areas where poverty and social exclusion exist, or of improving the management of public aid to the most vulnerable; it is also a question of closing the unjustifiable gap that presently separates some salaried workers from others. And in that regard, education, as we have been reminded of here today, plays a fundamental role.

We will study new proposals that allow us to optimise the results that the Law on Quality Education is now starting to offer, such as, for example, a five-point reduction in the school drop-out rate, or the very clear, noteworthy and visible increase in the number of Vocational Training students.

The Law on Quality Education was and is an important reform, and I hope that those responsible for governing in the different regional governments will act with the patriotism that this requires, and that they will obviously uphold the law, because the obligation to uphold the law is incumbent on us all, particularly on those that have institutional responsibilities, and rightly so.

We also want to continue making more progress on the reform of the public administration sector, although what we have done to date has allowed us to reduce the number of public bodies and companies by more than 2,000 - ladies and gentlemen, more than 2,000 public bodies and companies - and to generate savings for an amount in excess of 20 billion euros.

The same can be said for everything related to those issues that have to do with transparency, cleaning up public life and the institutional architecture, which will remain a priority for the months and years to come.

Those who claim to bring a new policy to Spain have started to show their true face, which is sectarianism, inefficiency and those abuses that always abound. For that reason, now is the time for us to make more proposals to renew the bonds of trust between our citizens and those who represent them.

Ladies and gentlemen,

We will speak about everything, with everyone and without limits. We are the first ones interested in definitively clearing away the disillusion and disenchantment with Spanish public life, and we will leave no stone unturned in our efforts to achieve this.

We are facing some major challenges, but we start from the premise that this is a great nation in which we live. Sometimes, we are too hard on ourselves, but we should remember that this is a great country, one of the leading economies in the world, with a welfare system, public pensions, healthcare, education and social services of a level seen in very few countries in the world; with motorways, highways and railways of a level seen in very few countries in the world. We are the second leading country in the world in terms of receiving tourists. That is not for nothing, ladies and gentlemen! We are the leading European country in terms of receiving Erasmus students; I don't think that anyone is forcing them to come here.

This is a country that has companies investing throughout the world, cutting-edge companies, that are carrying out such important works as the High-Speed Railway line between Mecca and Medina, and the Panama Canal.

We are a great country, but sometimes we have a certain tendency, I repeat, to punish ourselves and only focus on the bad things.
So, we are starting off on an excellent premise, namely Spain and the Spanish people, which is what Spain has to offer. And the challenge facing us now is to achieve a more competitive economy whilst also achieving a fairer and more inclusive society. We are going to tackle these issues with seriousness and without demagogy, which is difficult nowadays in Spain, but which is one of the requirements before trying to find true solutions.

Ladies and gentlemen,

I will close now, and I apologise for going on too long in my speech.

I thank 'Expansión' once again for inviting me to take part in this event, which by good fortune has become a classic in Spanish economic life.

I hope that next year, on the occasion of your thirtieth anniversary - which is a key date - you will also be kind enough to invite me here. And believe me when I say that I expect to return in the same position as today, and I will speak to you about a country with better economic indicators than those we have today and, above all, with more certain, better founded and sounder expectations that we are on the correct path to a long cycle of prosperity and development for all Spaniards.

Thank you very much for your attention. Thank you.