​Press conference by President of the Government

President of the Government.- Ladies and gentlemen, a very good afternoon to you.

I appear here before you, as is habitual following the final Council of Ministers of the season, to take stock of these recent months of hard work by everyone involved, including yourselves. But first and foremost, I would like to notify you of the broad strokes of the General State Budget that has just been approved by the Council of Minister, and then I will briefly take stock of the events of this political session and a very general analysis of Spain's progress during this term of office.

In this political session that draws to a close today, economic recovery has been clearly confirmed. Spain is the OECD country where jobs are being created at the fastest rate. Our recovery is undeniable and is going from strength to strength. Whatever the economic performance indicator you might look at - GDP, employment, prices, exports, credit, etc. - the result is always the same: our recovery is a reality.

You can look for whatever blemishes you wish in this reality, but there is an undeniable change of situation, which is filtering down to an increasing number of people, and this is something that we should all embrace; this is something that we should all welcome, regardless of any other consideration.

In order to enhance this recovery, at today's meeting - the last of this political session - the government has approved the General State Budget for 2016. As we have said on various occasions, we will govern until the very last day of this term of office and the decision we have adopted today is good evidence of that.

By approving the Budget, we are setting a path that allows the various public and private economic agents to make their forecasts and take their strategic decisions set against a stable horizon.

The Budget will be officially presented, as is habitual, next week, on Tuesday 4 August - this will be done by the Minister for the Treasury and the Public Administration Services - before the Lower House of Parliament, but I believe it is appropriate to highlight the following aspects of this draft law:

- It perseveres with the colossal task of fiscal consolidation, a thankless and difficult task, but one which has laid the foundations for this country's recovery. We have managed to go from the verge of bankruptcy, with a deficit of 9% in 2011, to a much more reasonable situation, with a deficit for next year, for 2016, of 2.8%, and a forecast of a zero deficit for the coming years. Next year we will be looking at a situation of a primary surplus and we will come out of the excessive deficit procedure established by the European Union. In order to achieve this, we are going to reduce the ceiling on expenditure by 4%; in other words, we will spend 5.6 billion euros less than in 2015 thanks to the savings made as a result of economic growth.

- The regional governments will receive 8.7% more financing. They will receive 7.4 billion euros more, in addition to a further 2.9 billion in savings on servicing debt due to liquidity measures at a zero percent rate that the government has made available. In total, more than 10 billion euros in resources that will be allocated to maintaining essential public services, such as healthcare, education and social services and which will also help them to more readily meet their commitments to achieve a balanced budget.

- The Budget provides for a 0.25% pension rise. Since January 2014, almost 900,000 new contributors have been incorporated into the social security system, but we still need many more to return to a balanced system.

- The clear improvement in the country's economy will help redress, little-by-little, the efforts we sought from Spanish society. If this year we have been able to do this through tax reductions, next year we will be able to improve the situation of public sector workers. The General State Budget for 2016 provides for a pay rise of 1%, the first in the last five years. This year, during 2015, they will recover another quarter of the extra payment from 2012, and the remaining 50% over the course of 2016. We are absolutely aware of the efforts made by public sector workers and that is why I want to point this out, acknowledge this and publicly thank them for this today.

- The Budget also clearly supports growth and the transformation of our economy through certain headings, such as investment, funding for education, driving employment policies, help for families and long-term care. And also, through the CRECE Plan (Growth, Competitiveness and Efficiency Plan), which seeks better management of national and EU funds for national investment in the environment, SMEs, developing the Digital Agenda and R&D+i.

- Finally, I wish to highlight that this Budget continues to give over its major share to social spending, 53.5% in total, as can be seen in this graph. In Spain, we have managed to overcome the most difficult periods of the crisis whilst maintaining the pillars of the Welfare State. A good example of what I am saying is that more than 13 million Spaniards received some form of social protection income last year, whether pensions, for care, re-insertion income or unemployment benefits. Of every 100 euros that we will spend next year, 39 euros will go towards pensions, seven to unemployment and active employment policies, 8 to other social expenditure and a further 14 towards contributions to the regional governments that fund, as you are aware, essential social services: healthcare, education, long-term care and others. And another 10 euros will go to servicing debt.

In short, this Budget draws to a close a very difficult period for everyone in Spain and opens up a new period of sustained growth and heightened job creation. We can only present this Budget because Spain is moving into a virtuous circle, with more competitiveness, more growth, more jobs, more revenue and lower taxes which, in turn, help drive more growth and competitiveness.

This Budget goes towards strengthening the upward curve of our economy, which unless this is halted or the direction changed, will lead us into a very long period of growth and well-being, the longest period in our recent history.

The approval of this Budget culminates a political session that has been one of intense activity.

- The most important measure we have adopted this year has been the tax reform, the effects of which are now starting to show through in the new trends of the Spanish economy. At the end of this term of office, the Spanish people will pay less Personal Income Tax than at the beginning and, if economic recovery is maintained, we will propose new tax reductions in the future.

- I would like to mention the reform of the public administration services. This has continued at an intense pace throughout the year, with the approval of important legislation to improve administrative procedures. In this slow, but sure, process, almost 2,300 public bodies have been eliminated during the course of this term of office and savings have been made for a sum of close on 30 billion euros.

- Moreover, we have approved almost 100 laws in all areas. I would like to highlight, among others, the reform of Vocational Job Training. This is a key element to help drive job creation and fight fraud and to act effectively against inequality and exclusion, because it seeks to improve the training of those people who have been on the dole queues for a long time and who have the most difficulties in getting back into the job market.

- In this political session, we have also passed countless legal measures to fight corruption which, I stress, are fully in force and effect. We have spoken about this on many occasions and I would merely highlight the new aspect of the improvement to the policy of confiscation, in order to ensure that those sentenced for corruption return to society that which they have stolen. As you are aware, the Transparency Portal has also started to operate.

- Among these close to 100 new laws approved, worthy of mention are the Family Support Plan, the Second Chance Act, the Bankruptcy Act, the Strategic Plan to Counter Violent Radicalisation, the Victims' Statute, the Law on Voluntary Jurisdiction, the National Security Act and the reform of the Criminal Code. At the end of this speech, you will be given a document with the legislative activity we have proposed to the Lower House in recent times.

- Furthermore, under the heading of international activity, I wish to highlight our election as a member of the United Nations Security Council and our focus on two of the main global challenges at this time: Jihadi terrorism and the migratory crises.

Hence, this has been a year of tremendous activity, which completes the transformation that Spain has undergone in this term of office. This transformation has been acknowledged by all the main international bodies: the European Commission, the International Monetary Fund, the OECD, etc. I will not bore you with a list of all the figures that support this change, but I would like to underline a few key points.

Yesterday we became aware of the figures for the second quarter of the year, with a 1% increase in activity, thus placing us at levels unseen for the last eight years. We have now enjoyed eight straight quarters of economic growth. We have a graph here that is very revealing: this is what happened in 2011, in 2012, in the first part of 2013, but now in the second part of 2013, and continuing on into 2014 and 2015, we can seen the fruit of the reforms and the rise in economic growth in our country. Well, this figure confirms this acceleration in growth which has led us to revise our growth forecast for the year to 3.3%, more than double that enjoyed last year. That is what the graph shows: 2011, 2012 and 2013 were very bad years for the Spanish economy and for the Spanish people; but a change took place in 2014, the economy grew by 1.4%, and in 2015 we hope to grow, as you are aware, by 3.3%.

Out of the main countries in the Eurozone, Spain will grow the most, and more even than the United Kingdom or the United States. The OECD forecast for 2015 is for Spain to grow by 2.9%; the International Monetary Fund believes we will grow by 3.1% and we believe by 3.3%, but you can see that the second-placed country will be the United Kingdom, with 2.4%, then the United States with 2%, the OECD average is 1.9% and Italy stands at 0.6%.

I will move on now to inform you of the situation in relation to the public deficit which, I repeat, is a very important issue and its control is undoubtedly of tremendous use for us being able to talk about economic recovery in our country.

We set out from a situation that was out of control, with a deficit of 9% and a divergence of 50% from the scheduled target of 6%. Now, as I have just explained, the corrective path places the deficit next year at 2.8% and foresees a zero deficit within a couple of years. That is the main problem of the Spanish economy, isn't it? In 2009, which was a very bad year, as you will remember, the deficit stood at almost 11%, at 10.96%; it dropped a little in 2010 and 2011 and, from then on, it has consistently dropped. I repeat, this has been one of the most important factors in us being able to talk about the recovery of the economy.

I wish to highlight some important factors in this respect. During the whole term of office, we have met the budgetary stability targets; and that, apart from being important in itself, has helped generate a great deal of confidence and credibility in the future of the Spanish economy. The second comment I wish to make on the deficit is that it is fundamental to maintain balanced policies; that is what generates confidence both within Spain and abroad. And the third comment I wish to make is that this correction to the deficit will no longer come from reduced spending but rather from economic growth. By growing, there are more people, more Spaniards, in work, and hence, there is greater revenue going into the public coffers.

Now I want to talk about prices. The sharp growth in the Spanish economy is not accompanied by escalating inflation, for the first time ever - this is also a very revealing fact from an economic point of view. Yesterday we also saw the latest figures on inflation published: it stands at zero. Prices remain controlled and the differential vis-à-vis European inflation is favourable for Spain, which thus means we are recovering competitiveness. That is also a key issue. There you have the figure for the inflation of the Spanish economy: this has stood at zero and even below zero. I repeat, this is important for competitiveness and hence for growth. So, this is positive for the economy but it is, above all, positive for people as they do not lose purchasing power.

You all know the phrase, which is absolutely true, that "inflation is a tax on the weakest". That is why it is very important for us to control inflation in our country.

I will move on now to the foreign trade sector. Last year saw a record number of exports and this year they continue to grow at above 4% in goods, and above 6% in services. This is another element that marks the profound transformation of our economy: we are growing in a healthy and balanced manner, with moderate prices and with the foreign trade sector playing a leading role.

The proportion exports play in our GDP has not stopped growing in this term of office: it stood at 28% of GDP in 2011, at 30% in 2012, then 31%, then 32%... This is very important: we are producing here, and hence, jobs are created here; we sell abroad and hence money comes into our country from abroad. Today Spain, in its proportion of exports over GDP, is ahead of France, Italy and every other major OECD country, with the sole exception of Germany.

And finally, I will mention job creation. Job creation is the most important indicator, because this makes sense of everything we have done over the last few years. This graph clearly shows what has happened in Spain in recent years: this starts in May 2007, and just look at the trends since then and what has been happening in the latest quarters.

Today there are half a million fewer people unemployed than in the first Labour Force Survey of this term of office, and today there are more National Insurance contributors than when we came to power. I would remind you of the figures of the latest Labour Force Survey: 411,000 new jobs in the quarter and 513,000 in year-on-year terms.

Today we have also seen the Eurostat figures on employment and these are truly figures that spur us on to continue working hard in the future. Over the last 12 months, 56% of people who have left the dole queues throughout Europe are Spaniards; so 56% of people who have found a job in Europe are Spanish. These are contained in the figures of the Economic Office of the European Commission. Just look, in the period between 2008 and 2011, six out of every ten people who lost their job - 59% - were Spanish. That is the most telling figure of the change in employment trends that have taken place in our country. Today, unemployment has fallen to an annual rate of 7.4% and social security affiliation is growing at an annual rate of 3.4%.

I am aware that these figures may seem modest given the scale of work that still remains to be done; I am well aware of this. Clearly, we would have liked to have created a lot more jobs, but in just two years, in 2014 and 2015, we will have created 1 million jobs in Spain and those who criticise us forget that their government saw the unemployment rate rise from 8% to 22%. Those are the figures corresponding to one party then another.

I could also speak to you, because the figures are positive, about the creation of companies, about the tourism figures - this will be a wonderful year - about the recovery of credit, which was a key issue for the recovery of the economy, about foreign investment or the number of new car registrations, but I will not do so because, if I do, my speech will go on forever. What I want to underline is that things are much better now and that the Spanish people can look to the future with greater certainty and optimism than before. And, if we continue to do things well, we will be much better off in the future.

Now, in the same way as I say this, I assert that risks exist that are unrelated to the economy, but to political uncertainty.

The first challenge we face is the challenge of pro-independence breakaway groups that the Regional Government of Catalonia has been stirring up during the whole term of office and which will reach its flashpoint with the elections that have been announced - at least it would seem so - for the end of September, which they are seeking to pass off as elections of a plebiscitary nature but which is not the case under our legal system or indeed under any other system in any part of the world.

The government will do what it has always done; it will ensure the law is upheld and, furthermore it will actively defend it. There will be no elections of a plebiscitary nature, because the law forbids this. There will be elections to the Regional Parliament of Catalonia, which is very important, but there will be no plebiscite, in the same way as there was never a referendum, irrespective of how much propaganda they sought to make out of this.

The government will ensure that the law is upheld, because that is what the Spanish people want, including those who live in Catalonia, and because that is the primary obligation of any government in any country in the world, to ensure that the law is upheld.

My government will also defend Spain's unity, national sovereignty and equality among the Spanish people because it is our obligation to do so and because we believe in this. Similarly, we will not allow the citizens of Catalonia to be deprived of their triple status of Catalans, Spaniards and Europeans. We don't want them to leave Spain, and hence, to leave Europe.

Spain is a serious country and in a serious and civilised country you cannot try to break the law or reap some form of political advantage from this.

The other issue that may endanger our future is a renewed loss of confidence that we found so hard to recover in the first place. Recovering credit has been arduous and laborious, but it would be very easy to lose this and in no time at all.

When the only political proposal we are hearing from the opposition is the threat of liquidating all the reforms that we have implemented, this sends out an appalling message and generates a great deal of uncertainty. It also generates uncertainty and mistrust when you preach an economic policy that would lead us, once again, to an out-of-control deficit and when you adopt measures that restrict economic activity or raise taxes on purely ideological grounds. As I have said on several occasions, everyone is entitled to say what they wish, but not to endanger the very pillars on which the recovery of our country is founded.

The third threat, although I hope that decreasingly so: developments in Europe and, more specifically, the crisis in Greece. We hope that the technical talks for the third bailout of Greece are progressing at a good pace and that an agreement can be reached as soon as possible that will remove any uncertainties once and for all. I hope that the crisis we have gone through in recent times, which has been very serious, will serve as a lesson to one and all. Those in government are here to resolve problems, not create them, and one way of creating serious problems is to promise the impossible.

Just six months ago - this is a truly incredible fact - Greece was growing, Greece was creating jobs, it was going to start paying off its debt and it was on the verge of coming out of its bailout programme. That was the situation back then but now the situation and expectations are much worse, as you are all aware. And I, of course, will work to ensure that nothing similar happens here.

Ladies and gentlemen, I will end now.

During this political session, we have managed, between us all, to make progress in the recovery of our economy and in the general modernisation of Spain:

- We have a much healthier economy, which is growing and creating jobs at historic levels. There is another fact that is truly noteworthy: just look at how economic growth and job creation are developing: more growth and less unemployment. The aim is to maintain this and, if we can, actually step up the pace in the future.

- During this period, we have lowered taxes and there are 200,000 large families or families with people in their care who are receiving family support cheques.

- We have improved the training instruments for those people who have lost their jobs so that they can try and get back into the labour market.

- We have taken steps to modernise and streamline our public administration services, and all our market unity mechanisms.

- We have improved our legislation on issues related to the fight against corruption and have set up the Transparency Portal.

- We have achieved a post on the United Nations Security Council and as a member of the UN and as a member of the European Union, we are actively participating and promoting forums of debate on the main international challenges facing us, such as - I mentioned them before - Jihadi terrorism and migratory problems.

- And today we have approved a Budget that offers a future of security and certainty to the various economic agents, and takes steps towards returning to Spanish society the efforts we were forced to ask for back when we needed to tackle a very serious economic crisis.

In short, I believe that Spain is better off today than it was a year ago; I sincerely believe this and of course it is much better off than when we came to power at the end of December 2011.

Aside from that, I can tell you that during this political session we have made a great deal of progress together, but that there is still a lot to do. In the same way as we are aware of the progress made, we are also aware that there are many people who haven't felt the effects of the recovery. There are many people who still haven't found a job, but, at any event, the fact that there are many Spaniards who have found one is a sound basis for supposing that others can also find a job in the future, those who haven't found one yet, and hopefully much sooner than later.

There are also people who, as a result of the serious crisis we have gone through during all this time, have seen their purchasing power affected. I am absolutely convinced that if we continue to maintain policies such as those we have undertaken recently, now that we have a greater budgetary margin, this situation can also be resolved in the future.

Of course, I have every intention to work, as I have done, and believe me when I say that I have worked very hard over the last year, to defend this future and to remove all those elements that may threaten this. And, of course, I will do everything possible to avoid spoiling this tremendous task that the Spanish people have undertaken over recent years, the fruit of which we are only just starting to harvest now.

Thank you very much; I will now take any questions.

Q.- You mentioned the pro-independence movement as one of the main threats to the economy. Is the government concerned about the single list announced by the President of the Regional Government of Catalonia, Artur Mas?

On another note, do you intend to call a Conference of Presidents, as certain regional presidents are calling for, to talk about the issue of regional financing?

President of the Government.- The government is not worried in the slightest. Each person stands in the elections as he or she sees fit and opportune. I think we can all agree on that! Mr Mas is fully entitled to appear on a list headed up by someone who joined from the Communist Party, and in second place on the list, by someone who came from Esquerra Republicana [the Republican Left] and the third who came from the PSUC [Unified Socialist Party of Catalonia], and furthermore Oriol Junqueras is in fifth place on the list. He is perfectly entitled to do this and perfectly entitled to ask his traditional electorate to vote for this list that we are now all familiar with. So, he is perfectly entitled to do this and to defend whatever he sees fit and opportune, but, in the same way as he is entitled to do that, so is everyone else and, of course, they are under an obligation, more so those who head up the responsibility to govern, which is to follow the law.

That is the obligation Mr Mas is under, which I am obviously under as well and that all the people of this country are also under. If everyone interpreted, twisted or simply ignored the law, it is clear that we would be unable to maintain the necessary level of co-existence for which we have worked so long and hard over many years.

At any event, our position on this issue is well-known. The government will ensure that the law is upheld and it will defend what I have just mentioned. We are going to defend national unity and we are going to defend national sovereignty. We believe that it is a source of great wealth to be Catalan, Spanish and European at the same time. We believe that it is foolish for things like this to be proposed in the year 2015, and it has been proposed, although some don't want to acknowledge this but it is true, that Catalonia should leave the European Union in the event that the intentions of some prevail and prosper. Hence, in addition to the government being obliged to uphold the law, we will fight to defend many millions of Catalans who feel Catalan, Spanish and European, who wish to continue being so in the future and who also wish for their governments to concern themselves with resolving real problems, which is what some have not done during this term of office.

In relation to the Conference of Presidents, I would like to make two or three important comments on this matter.

This year, the regional governments will see their funding substantially increased; specifically by a little over 10 billion euros and I believe that it is positive for Spanish society as a whole to be aware of this. Of these 10 billion euros, a very significant amount - 7.46 billion euros - come from an improvement in the Spanish economy, simply from an improvement in the Spanish economy, because the model is exactly the same as it was a year ago, two years ago, three years ago, four years ago and even five years ago.

As you will remember, I have said on many occasions that the main problem Spain has suffered from is that in the years 2008 and 2009, 70 billion euros in revenue were lost, which is an astronomical figure, and logically this affected the government of the nation, the regional governments as a whole and the local authorities of our country, including islands councils, district councils, provincial councils, etc. To the extent that things are starting to improve, the regional governments will also increase their revenue and this year, simply as a result of the recovery of the Spanish economy, they will receive more than 7 billion euros extra and, moreover, they will receive another 2.9 billion euros as a result of a decision taken by this government, not as a result of the recovery of the Spanish economy, but due to a decision taken. Since they cannot get funding from the markets, or receive loans, it is the government that has had to go to the markets with interest rates at zero, resulting in a sum of 2.9 billion euros for the regions.

There are regional governments which, back in 2011, when we came to power, were being funded under patriotic bonds and they were paying 7.75% per year, 7.75%. Just look at the cost of money. It now stands at zero.

So, the sum of the improvement in economic activity in our country plus zero-interest rates have led to these amounts in excess of 10 billion euros that the regions will receive. There are certain people who have asked for a Conference of Presidents but, for example, the Region of Valencia will receive 1.58 billion euros more in financing than last year.

But, I repeat, this is why we give due importance to economic activity and this is why we said that we would not get into a debate now on the regional financing model and we are not going to redistribute anything; what we must do is grow so that there will be much more to share out when the time comes. And now, without changing the model, more than 10 billion euros more.

That is the first comment I wanted to make. My second comment is in relation to some things we have heard regarding the public deficit. The public deficit targets must be met. This is not a whimsical decision by anyone. It is essential to control this in order to keep up the economic recovery and to create jobs in Spain. And I want to add something else: controlling the public deficit is enshrined in our Constitution and it is contained in our Constitution because the former Socialist President of the Government included it in the Constitution; I should add that with my vote and with the vote of the whole of the People's Party. Hence, one must be consistent in what one does.

I remember when the General Secretary of the PSOE [Spanish Socialist Workers' Party] said no, that it was necessary to change Article 155 of the Spanish Constitution only two years after it had been passed. And, moreover, this article forms part of the European fiscal treaty that we have signed with all the other Member States of the European Union.

So, we shouldn't deceive our people. The law must be followed because it is contained in our Constitution and because we have signed this at a Europe-wide level, but, above all, because this is fundamental, as has been shown, for the economic recovery of Spain.

Hence, my position on this issue is what I have just mentioned. I believe that we must continue working, and this is pure common sense, quite simply in order to increase revenue. When you have jobs, people are working, consuming and paying taxes, and this obviously leads to greater revenue and better public services. That is the goal, that is what we have set as a priority and I am truly satisfied that this shows that some of the decisions we have taken lead to positive effects for everyone as a whole.

Q.- I wanted to insist on the Catalan issue because, in addition to this legal strategy that you are clear on and which you will undertake if necessary, I would also like to know whether you have a political plan to try to tackle the unity of the pro-independence forces, which is a unity that is not so clearly seen on the other side in terms of the pro-constitution forces.

I would like to know, in this regard, if you believe that it is necessary or appropriate, for example, to set up talks with the General Secretary of the PSOE or with the leader of Ciudadanos, and also if you believe that, in the next term of office, it would be appropriate to start to propose a revision of the Spanish Constitution.

And, as you have just referred to Article 155, I imagine that because your sub-conscious betrayed you and you really wanted to talk about Article 135, I would like to know whether you believe that, in the event that it is necessary, it would need to be applied.

President of the Government.- You are right in relation to my sub-conscious, but neither was this such a serious mistake because she understood exactly what I was talking about.

In Catalonia, there are political forces that have decided to join up to a single list while others defend the same "no" positions, such as the CUP [People's United Candidature]. I am absolutely convinced that those parties that defend the Spanish Constitution defend the unity of Spain, and we believe in that. Let's not forget that we are the oldest nation in Europe, that we are aware of the ties of all kinds that unite us and of how essential it is to make progress, to all be in agreement and to be proud of what we have done together, and we will be in agreement in times of difficulty.

You tell me that I should meet with the General Secretary of the PSOE. I would be delighted to do that, but the elections for the Town Council of Castelldefels, where, for example, I was just 48 hours ago, were won by the People's Party but the Socialist Party, in order to win the mayor's office, accepted the support of all the pro-independence parties and accepted that the town of Castelldefels should join up to the Association of Pro-Independence Municipalities of Catalonia, which you will appreciate causes some of us, I imagine that many of us, certain doubts. The same thing happened in the City Council of Badalona, where the People's Party won the elections; it had more than double the number of votes of the second leading political force, but the Socialist Party, together with Esquerra Republicana and Podemos, took over the mayor's office, with a member of the CUP, which is a pro-independence party.

Hence, it is very important for parties to be consistent, for them to say the same wherever they may be and to act consequently, because we are not talking about a small council, where you may have traditional confrontations between some 500 people; no, we are talking about the third largest city in Catalonia, which is Badalona, and another of the most important towns with the greatest pedigree, history and tradition, which is Castelldefels. But, at any event, I am absolutely convinced - anything else would be incredible - that we will all agree on this issue. The People's Party obviously has its position on this issue very clear.

The reform of the Constitution, as you are well aware, because I have already said this on many occasions, was not a priority this time round. I continue to feel that it is not a priority for Spain. I continue to think that the priority for Spain is to wage our own wars in Europe, to help very clearly establish what is going to happen in Europe, which will be very important for the years to come, and to consolidate the recovery of the economy, to continue to gain competitiveness and to continue to lay sound bases for the future.

At any event, this is an issue that we have pending; but what is important is to look for the right moment and, above all, to seek a consensus. But as regards this article, I have absolutely nothing to say. It is an article contained in the Constitution, and hence, I have nothing to say in relation to this.

Q.- You mentioned earlier the pro-independence challenge and I wanted to ask you about the content of the strategy, the government's response to this pro-independence challenge in Catalonia. In other words, do you believe that we are better or worse off than at the start of this term of office? In short, has the government's response been the right one or could it have been improved to tackle this challenge that has arisen in Catalonia? Could it have been different?

I also wanted to ask you to what extent you are concerned by the cases of corruption that continue to come to light. Do you believe that this also represents a threat as a result of the demoralisation and mistrust that this causes?

President of the Government.- I imagine that no human work exists that could not be improved upon and, if someone believes that what they are doing cannot be improved upon, they clearly have a problem. I, of course, do not consider myself to be among those people who fall into this category.

Now, having said that, I would have liked those running Catalonia to have paid closer attention to the real problems faced by the people there. The economic policy undertaken over the course of these years has also resulted in economic growth in Catalonia, it has also generated jobs and the work of many Catalan companies has also been very important, because exports have risen considerably. But I believe that if those in charge of the region had paid closer attention to these economic issues then things here would go much better.

On another note, I can tell you one thing in all frankness - Catalonia will not become independent. In other words, that is not possible at this time; it makes no sense. We are part of a European Union that is increasingly united as a body. Countries are knocking on the door to join the European Union, countries wish to join the euro… Trying to break up a process of union, which is the most important thing to have been done in many years, exiting the single currency and the European Central Bank is something that makes no sense and is not going to take place under any circumstance whatsoever. Unfortunately, I believe that there are people who have not acted with the due responsibility nor have they risen to the circumstances, and I am sorry for having to put it this way.

The government's response is arguable, as are all the decisions that the government or any of us that are present here adopts, but it has obviously been prudent, it has been proportional and we have not given away anything that we should not have given away; nothing at all. Aside from that, everyone is free to act however they want, but prudently, proportionally and, of course, we have not given away or given up any of our principles or anything else that is contained in the Spanish Constitution.

Indeed, the gag order on one of the issues that has been in the news recently has been lifted and the facts made public. In that respect, whatever the courts say and do is well said and done. As regards members of the People's Party that may have been involved in activities that they should not have been, in cases of corruption, we will obviously take action, we have taken action and, aside from that, we must respect whatever the courts say on these issues.

What is my opinion? Apart from what are legal issues, we have seen talks that have been published in the media which are not uplifting in the slightest, which are absolutely reproachable and which we would much prefer never to have heard in the first place. And what we need to do in the future is to work so that these things never happen again.

Q.- You have spoken about the main figures. I would like to ask you about the more than 1.5 million households with all their members on the dole, according to the latest Labour Force survey, and about those people who are on the verge of social exclusion or who have suffered cuts in their care. The specific question is whether you appreciate that these people do not believe your promises, taking into account that we are just a few months away from the elections. That's on the one hand.

On the second hand and following on in terms of the issue of corruption, "Púnica" and "Gürtel" are two cases that have affected the People's Party while the government still stresses that it has done everything possible to combat corruption. I would like to know whether you believe that what the government has done was right in light of what we are seeing and of the details that have come to light in the last week.

President of the Government.- What is important is that we are going to continue doing everything in our hands so that these things don't take place again in the future.

It is true that there are people who are living through or who have gone through difficult situations, but it is also true that this country has gone through the worst economic crisis in decades, the worst. You have seen some of the figures that we have made available to you this morning. Spain lost 70 billion euros in revenue between 2008 and 2009, and it is not the same to have 70 billion euros to spend as to have nothing, or to have 170 billion to spend as to have 100 billion.

What did we do? We set priorities. We did two things: firstly, we tried to reverse this trend by controlling spending; we tried to not resort to a bailout and we tried to grow and create jobs, which is now starting to happen, as I said before; secondly we tried to prioritise what we needed to maintain. The first thing we managed to maintain was the public pension system and, moreover, we managed to raise pensions, little, but we managed to raise them during each budgetary year, including some years with inflation below zero, thus helping to maintain their purchasing power.

We have maintained key public services - we have maintained social services, we have maintained unemployment benefits, with spending of more than 30 billion euros per annum, we have extended the PREPARA Plan, we signed an agreement with the trade unions in December last year to care for those people in the worst situations, those people who had been in the dole queues for the longest, and we took important decisions on Personal Income Tax, such as the "negative cheques", and I have already mentioned that there are now 200,000 people receiving these cheques.

Was the situation difficult? Clearly. Does it remain difficult? Clearly. But you have to remember we have gone through a very serious crisis. What we have to do now is to be constructive and say, if this year we are the country that will grow the most in the European Union, we should be pleased and, above all, we should work flat out to maintain this position next year. And the same is true of employment. That's how things are. I know that there are still many people in situations of difficulty, of course I know that, how can you imagine I don't know that, but they are now fewer people than before and, of course, we will continue to work to reduce this number further still.

Q.- I wanted to ask you about two issues that have just been mentioned. Do you feel it is compatible that the Government of Spain has advocated in Europe that the European Union should not finance Greece until it commits to meeting the deficit targets set by the 'Troika' with the fact that here in Spain, when Catalonia announces in advance that it has no intention of meeting the deficit targets set, the government hands over 1.8 billion euros in extra funding to thus make it the best funded autonomous region, and even offers it loans at a zero interest rate, as has just been mentioned? That is my first question.

In terms of the future, in the event that no party received an absolute majority at the upcoming elections, do you feel it would be appropriate to form a major coalition between the PP and the PSOE in order to seek stability, particularly in terms of Spain's image abroad, as you called for recently?

President of the Government.- I understand that the first question you asked me seeks to establish a parallel between the European Union's actions towards Greece, and what the Government of Spain may or may not do in relation to certain autonomous regions that claim not to be prepared to meet their deficit targets. That's right, isn't it?

As I explained before, increased funding is not down to any change in model, there hasn't been any change; it is down to the fact that there is greater economic activity, more people in work, and that there are more people contributing and hence the State has greater resources. So, when this happens, this benefits the country and the people as a whole; but it also benefits the public authorities: it benefits the government of the nation, the regional government and the local authorities. Hence, the lion's share of the increased funding comes from an improvement in the economic situation. That is automatic. When the economic situation was very bad, funding was very low for everyone: for central government, for the regional governments and for local authorities.

Then there is a second issue, the fact that the interest rate is zero. When we came to power, you are aware that we were overshadowed by the threat of a bailout, for Spain as a nation, which would have meant being in exactly the same situation as Greece. But you also know that there were certain regional governments, and I will not go into the reason why, that had no access to finance. They couldn't get financing because they had already exhausted the infamous "patriotic bonds" and that is why the government, because it was its obligation - I believe that it would be very unwise not to try to save any public authority, whatever it may think and whatever it may do - set in motion the fund to pay suppliers - the Supplier Payment Plan - because there were public authorities that were not paying, quite simply not paying, those people who had rendered a service to the public authority.

And what would we have left behind if we had not done this? All those people out in the streets without having been paid for having done their job? And what legal certainty would then exist in Spain? Of course, these public authorities could not cover their public deficit and, furthermore, when there was a debt maturity, since they could not be renewed and they could not pay them off, they would have gone bankrupt. And are we going to allow our public authorities to go bankrupt? No, we aren't. In exchange, and this gives rise to your question, they are required to meet their targets, in the same way as the government, or the local authorities, or those other regions are required to meet their targets. That is why I said earlier - I can see the debate now that is taking place - that this is an obligation on everyone and that everyone must follow the law, because this is not an operation affecting just one autonomous region, or one government, rather this affects all the public administration services.

We must all work towards a common goal, that of meeting our commitments abroad and developing a sensible economic policy. It is clear that the law has instruments, as has taken place in the case of Greece, but it is also clear that the government, as I pointed out earlier in the response I gave one of your colleagues, must think things out very well, act prudently and act proportionally, and it must know what is in the best general interest when to takes one decision or another.

But, I repeat, we must control the public deficit and we will do this with the Budget drafted for next year. I am not going to present Parliament with a Budget with increased expenditure, announce that I am going to ignore the deficit and start to pay out money here and there, because that is awful for Spain. That would mean liquidating the credibility that we have built up. I, of course, am not going to do that; others may do as they please. They may do as they please but without prejudicing the general interest. And we will leave the issue there.

You are aware that getting ahead of the game does not tend to be beneficial. I believe that one of the most important things over the last few years has been political stability. I believe that it has been very positive for Spain to have a stable political situation and a government that was able to approve reforms, although everyone criticised it and no-one supported this, but that is also the responsibility of those in the majority. "Do you have a majority? Well look, you must take decisions then". I have always said, in the case of Greece, what was the point in holding a referendum? Shall I hold a referendum in Spain in order to implement a public deficit of 10%? That would be irresponsible of me, extremely irresponsible. So, everyone who governs must assume their own responsibility.

What will happen after the elections? I don't know. I, of course, believe that if certain things that we have seen in the local elections are repeated, then that will be bad for Spain. Governments made up of three or four parties, governments that do not respect the majority will of the people make very little sense in my opinion, and I hope that this does not happen.

Q.- I wanted to return to the issue of Catalonia to clarify a couple of things. Don't you believe that, as is being said, these regional elections are taking on an exceptional nature of their own - the other day the PP's own candidate described them as the most important elections ever - and hence, they are in fact becoming a plebiscite between the forces that are in favour of independence and those that could be called pro-constitution or pro-Spanish?

Then, as regards the issue of elections, I don't know whether you believe that this is the time to give us some information about the plan you have in relation to these elections, but, at any event, I would like to challenge you to answer me here and now as to whether, if you don't secure a sufficient majority to govern on your own, you would prefer to govern with Ciudadanos or with Unió, for example.

President of the Government.- I understand your first question, and I will reassert what I said in my opening speech, that these are regional elections. Anyone can call them whenever they want and see fit, and anyone can make the coalitions they wish, and mix one party with another and say that the candidate for the Regional Government of Catalonia is the one in fourth place on the list and not the one in first place, or it might be the one in fifth place; in other words, the possibilities are endless. But leaving these considerations to one side, and leaving to one side the fact that everyone carries out their electoral programme how they see fit and opportune, everything will be discussed in good time. The issue you ask about is undoubtedly of great importance, but these are elections, as established in the Statute of Autonomy of Catalonia, to elect the Regional Parliament and that parliament will then elect the President of the Regional Government of Catalonia.

Hence, these elections have certain important issues that were not previously on the table or they weren't there quite as intensely as on other occasions, but these are regional elections, and it is important that we are all aware of that.

The date? That does not seem to me to be an issue of great importance, because everyone knows approximately when they will be held and, at any event, the procedure will be the same as always, which is that dictated by common sense. As soon as I know the date, I will notify His Majesty the King, and then I will notify all of you.

And then, with whom would I, if there is not a sufficient… That is what I am saying to you. What happens if I jump ahead of the game? We are going to work to reach an agreement with the largest number of Spaniards possible, but, aside from that, we will be constructive, and well, more or less we know with whom we can reach an understanding and with whom it would not seem reasonable to reach an agreement. And since we tend to only do reasonable things, nor is it… Then the numbers themselves will be very important. We'll see.

Q.- Instead of a hypothesis, I am going to ask you to look back into the past and I wanted to ask you something about Catalonia. You have said that any human project can be improved upon. What do you feel you could have done differently in relation to the Catalan sovereignty challenge over the last few years? Do you regret having lodged an appeal against the Statute?

Secondly, the majority of your opening speech was about the economy. You have thrown in almost all your chips on the back of the economy for your re-election, but corruption has filled up more front covers this year than economic figures. Why do you feel that voters will forgive the corruption in your rank and file - "Bárcenas affair", "Gürtel affair", "Púnica affair" - and only vote thinking about the economy?

President of the Government.- I work more on the basis of looking to the future rather than to the past and I believe that I can make this better. Hence, I would thank you not to make me talk about the past, because, moreover, what is important is what I am going to do in the future. The past is in the past. Today we have presented here a summary and what we are going to do now is put all our efforts in to increasing economic growth and job creation. It is not my place to start talking now about the past. It is my place to look to the future. That is why we are presenting the Budget for 2016.

Now, there is a very specific issue which is if I regret having lodged the appeal. Absolutely not. When one believes that there is something that violently clashes with the rules that we have designed between us all, it is irresponsible not to tell those who have the capacity to take the decision to do this, and that it what we did back then. So, we do not regret taking this decision in the slightest.

But, I repeat, what is important is the future, which is bright and full of fresh challenges.

As regards the other issue, this is simply the other side of the coin, and hence, I am not going to give a speech on it here. Simply this: in the end, whatever the people say and whatever the Spanish people want is always okay with me. I, of course, will try, as I have been trying for all these years, to work so that I, and my party, can earn your trust. That is what we are going to do. We have done some things well, we have done other things which are not so good and, in the end, the judge and jury are the people of Spain as a whole, and we are all subject to their verdict.

Q.- Coming back for a while to the Budget, in recent years the regional investment allocated to Catalonia has been less than its weighting in the GDP of Spain. Will that be corrected in 2016 as a gesture to this region, or not?

President of the Government.- I believe that a major economic effort has been made in Catalonia over the course of this whole term of office, in a term of office which, from a budgetary perspective, was very bad for everyone because we were in a situation of crisis and the public authorities were not collecting revenue. But I believe that the Supplier Payment Plan was a good decision that benefitted many people in Catalonia, and I believe that the Regional Liquidity Fund allowed the Regional Government of Catalonia to be able to finance its own public services and attend to its debt maturities. Some significant investments have been made there. I had the honour of participating in the inauguration of the AVE [high-speed railway] link to the French border and the four provincial capitals are now all interconnected by high-speed rail travel; a major effort has been made at El Prat Airport, which is one of the best airports in Europe; a great deal of work is being done on a major infrastructure work - the Mediterranean Corridor - and an effort has been made on the ports in the region.

In all sincerity, I believe that a major effort has been made. Could more be done? Yes, in Catalonia and in any other autonomous region in Spain, in Europe and anywhere else but, in all sincerity, I believe that a major effort has been made and if I then have the responsibility that I have at this time, I will continue to foster investment in Catalonia and in other parts of Spain, as you would expect, because there are more than 7 million Spaniards living in Catalonia, there are many business owners and many SMEs that generate wealth, which are capable of exporting and which form a major part of our country, of Spain.

Q.- I had a couple of very specific questions. Firstly, in regard to Catalonia, I wanted to know whether you accept that all ties with the President of the Regional Government of Catalonia, with Mr Artur Mas, are now completely broken.

Secondly, are you self-critical in taking stock of this term of office? Do you regret, for example, how you managed the reform of the Abortion Act which stirred up internal rivalries in your own party?

President of the Government.- Let's talk about the future.

I talk with anyone who wants to talk with me. The issue of course is that it is not easy to hold a conversation that you can take consequences from when the intention is to hold a referendum to see whether I am leaving or not. You will appreciate that no President of the Government of Spain, or of any country, can accept this. That is unthinkable. That means you do not know what it is to be President of the Government, I repeat, of any country. No President of the Government is willing to allow his country to cease to be his country. This is something that is truly, absolutely foolish.

As regards your second question, you are simply going round and round looking back at the past… Let's look to the future.

Q.- I wanted to ask you about the Budget for 2016. You said that this is closely tied in to supporting growth. I wanted to ask you on what this will be based, how much will investment and spending on infrastructure grow by; how much will funding for education grow, if it is indeed going to grow and, since you have spoken about how there will be more aid for families, whether there will be any additional tax breaks or not.

President of the Government.- That will be presented, as I said at the beginning, by the Minister for the Treasury on Tuesday in the Lower House of Parliament because, for the time being, I have outlined the most important broad strokes, but yes, I can say something in relation to what you have asked me.

In terms of investment, the heading of investments contained in the General State Budget will rise, as will the heading of public corporations; above all, of Fomento, ADIF and the other public corporations. I cannot tell you exactly what the rise is at this time, but we will announce that on Tuesday.

As regards education, the heading of grants will rise; this is one of the very few areas that falls to central government on education issues, the rest of the powers fall, as you are aware, to the regional governments. There will be a major hike in R&D, which I can tell you - I mentioned this briefly in my opening speech - and there will also be a significant rise in those areas relating to long-term care. In other words, on these issues, there will obviously be help in terms of family-related issues.

Q.- You have mentioned the current system of regional financing on various occasions but, as you say that you hope they will have more future than past, and given that the system needs reforming, I wanted to know what sort of reform of the system you are planning. Do you believe there is any room to improve the situation of the regional governments which feel prejudiced under the current model, including, for example, Catalonia? Under a new system would you plan to introduce the principle of ordinality or of finalist items for the regions?

I wanted to ask you another question. You said that what is important about corruption is to avoid new cases emerging in the future and you have passed legislation to this end, but I wanted to know if you are clear about what has led to these cases of corruption taking place within your political party without the leaders - including yourself -being capable of detecting them in time.

President of the Government.- As I said to you before, there are some positive things. Recently all the institutions have worked absolutely independently and efficiently, both the Judiciary and Public Prosecution, and the State Tax Office, the Police and the Guardia Civil, and we hope they will continue to do so in the future. It is also positive that many laws have been passed that will obviously make it more difficult for this type of action to take place and obligations are imposed on those who take on responsibilities for governing in the various public authorities. Political parties are also under much stricter transparency obligations, as are the public administration services.

I believe all of this to be very positive. I think that there is a clear awareness in society now that very harsh steps needs to be taken to counter this type of activity and, in this regard, some of the things that we have unfortunately gone through in our country should serve to dissuade similar such events taking place in the future. In all sincerity, I believe that this will get better in the future, like so many other things in our country.

Now, I will answer your question about the regional governments. In fact, this does not only happen to the regional governments, it happens to everyone. Everyone believes they are badly funded; in other words, this happens to local councils and this happens to the government of the nation. If you ask each minister individually, and today we hold a debate which the Minister for the Treasury will subsequently explain, you will see that everyone feels that their ministerial department is worse off than the others. That is logical. But I believe that in terms of the future, I can tell you what my priority is in the issue of funding the public administration services.

I believe that the major challenge of the future is our social security system, but what is more, I believe that this is not only the major challenge in the future for Spain but also for Europe as a whole. The other day I was with the leader of a European Union country who said to me that in his country there were 3.3 million pensioners - just imagine that, 3.3 million pensioners - and 4.5 million National Insurance contributors. Just think about what that means: 4.5 million people paying pensions for 3.3 million. In Spain, the social security system, I don't remember the exact figure, but it clearly has more than 17 million contributors whereas the number of pensioners stands at 9.3 million.

So, when I say, because I have said this on several occasions, that in the next term of office we must hit the figure of 20 million people in work, I say this, firstly, because it is good for people who could not find work to do so, but also because the more people contributing to our social security system, the greater the possibilities, undoubtedly, of maintaining and improving the system.

If you look at how spending under the different public administration services has evolved over recent years, you will see that there is an issue there that is one of the main challenges for the future. We have been able, as I said before, to maintain the pension system and raise it little-by-little, but that is still the main challenge facing us in the future.

Aside from that, you asked about whether we can improve funding for the autonomous regions. Well that depends on whether the economic situation improves or not. If it improves, then of course we can increase funding. It has improved without changing the model, as I mentioned, by more than 7 billion euros, and that is without changing the model and simply because revenue has increased.

So, there is one thing that we must be aware of, and which we are aware of, but we don't always act accordingly: a country will improve and its public authorities are able to do more things, and people can live better, if there is activity in the country, if there is economic growth and if there is employment. I am not going to mention any specific country, but there are many countries in the world in which you are aware that there are no companies, nor economic growth nor jobs, and hence they have nothing. That is why we all need to be aware that the key lies in setting the right priorities.

What were we going to share out in this term of office? The goal was not to share anything out, the goal was to grow. Thanks to that, there are now seven and a bit billion more. Hence, as in so many facets of life, it is necessary to prioritise. For me, the priority continues to be to grow and create jobs, now and in the years to come; and in terms of the public authorities, all of them, but particularly the social security system. In Spain, there are more than 9.3 million people who receive a pension and these are the people that we must defend the hardest because they have the fewest possibilities of defending themselves.

That is all ladies and gentlemen. Thank you very much.