Press conference by President of the Government after European Council meeting

Brussels

President of the Government.- Ladies and gentlemen, a very good day to you and thank you very much for attending this briefing.

As you know, we have just concluded the ordinary meeting of the European Council, at which we agreed to re-elect Donald Tusk as President of the European Council until the year 2019. I believe that we should all welcome this decision which will lend stability to the European institutions at a time in which it is necessary to devote all our energies and all our efforts to responding to the genuine challenges facing the European Union and the concerns of the people.

I want to congratulate Donald Tusk. He has been a good president and has proven his pro-European vocation and his ability to manage such a demanding task as presiding the European Council. I am convinced he will continue to do a sterling job in the times we face in the near future.

As you know, the spring European Council particularly focuses on economic issues, at which we discuss the priorities of the so-called European Semester, which establishes the framework for the coordination of economic policies among the different countries that make up the European Union.

The European Union has overcome the worst of the crisis and now, for the first time in almost a decade, all the Member States have positive growth and job creation forecasts for the coming years. For that reason, at this European Council, within the framework of the European Semester, we have agreed to maintain the priorities of recent years: first, to boost investment; second, to push on with the structural reforms and, third, to apply responsible fiscal policies.

These are the same cornerstones on which Spain has structured its reformist agenda over recent years. Thanks to this and also to the efforts of Spanish society, the Spanish economy has experienced an unprecedented transformation; our economy is presently a benchmark for recovery, it provides stability to the Euro, it is growing more than the other countries of the European Union and, moreover, it is creating jobs. We are the European Union country that is creating the most jobs.

The European Commission, in its Country Report under the 2017 European Semester, acknowledged the efforts being made by the Spanish people and observed how sound the growth of the Spanish economy is; but what is important now is the future and there is still a lot of work to be done. The crisis has left high levels of unemployment in many countries, including ours, as you are aware. Hence, we must continue working on all fronts, both at a national level and at a European level, to consolidate growth and ensure that its benefits reach all our citizens and, above all, create jobs. You know that the goal, which can be achieved, if things are done reasonably well, is to create 500,000 jobs in each of the coming years to reach the figure of 20 million Spaniards in work. The latest figures we have seen from the social security system for the month of February point to 580,000 more National Insurance contributors than in February last year.

I have advocated to my European colleagues the three elements that I believe are key for the European Union and Spain to continue down the path of economic growth and job creation.

Firstly, we must not undo the reforms undertaken, but rather push on and, if possible, improve them. At a European level, it is fundamental to maintain and strengthen such initiatives as the European Fund for Strategic Investments (EFSI), known as the Juncker Plan, which is working very well, and also the initiative on youth employment; and we must make an effort to complete the Banking Union.

Secondly, we must make our economies more competitive. This particularly requires extending the single market and, for Spain, the areas of the Digital Agenda and the Energy Union are, as you are aware, especially important. They are fundamental for ensuring the competitiveness of our economies.

And, thirdly, we must continue to boost trade as a source of growth and employment. Something very positive has taken place in Spain in recent years; for the first time ever, we have enjoyed four straight years with a surplus in the foreign trade sector. Trade is the source of economic growth, it is the source of jobs and it has undoubtedly contributed a great deal to our economic recovery.

We have always advocated an open trade policy based on rules. Europe, the leading trading power in the world and the largest market, must continue to be an economy that is open to the rest of the world, because that means growth, jobs and prosperity for people. At this European Council, we have reiterated this general message of support for trade as a source of well-being and I am pleased with that.

We have welcomed the recent ratification by the European Parliament of the free trade agreement with Canada, which, in the case of Spain means, since the first day of its application, the elimination of 98% of customs tariffs for exports to Canada, which amounted in 2015 - the last year we have figures for - to 2.3 billion euros.

I also want to highlight that, at the request of Spain and Portugal, the Conclusions of the European Council will expressly include the intention to proceed with the negotiations on the association agreement with MERCOSUR and the intention to update the agreement with Mexico. This year, 2017, offers us a new opportunity because Latin America is looking now, more than ever, towards Europe.

On the matter of immigration, the Maltese Prime Minister presented a report monitoring the Conclusions of the European Council meeting back in December. This contains the initial actions that have been implemented following the Malta Summit in February at which we agreed on a raft of specific actions to manage migratory flows in a more suitable fashion and to avoid the dramatic loss of life in the Central Mediterranean.

The need to control this route was clearly stated, as you will surely recall, in the Conclusions of the European Council in 2016. They pointed to the need to strengthen the external dimension of migration in general and, in particular, the association frameworks that could affect this route. The Conclusions also urged taking short-term measures, such as strengthening the support for the Libyan Coast Guard and fostering return policies to the countries of origin of illegal immigrants.

At this time, the Central Mediterranean is the main hotspot of migratory concern. That is why we support action in Libya and in its neighbouring countries, although Spain considers that it is also necessary to remain alert to the situation in other areas, such as the Western Mediterranean route.

I firmly believe that the issue of immigration is a challenge that will be with us for quite some time. We must maintain strategic patience, intelligence and generosity. The principles that must prevail in our efforts are dialogue and cooperation with the countries of origin and transit.

In another scheme of things, we have also recognised the new initiatives on security and defence, without losing the perspective of what we have achieved together since the Common Security and Defence Policy was implemented. Spain has been at the forefront of the construction of European defence since the very outset. I would remind you that our country has taken part in all the military missions launched by the European Union, including the six missions under way at this time. But, moreover, we believe that this is an area in which a lot more can and should be done, because the international situation requires this.

Lastly, I wish to highlight the importance of including the European Union's full commitment in the Conclusions of this European Council to support Member States in guaranteeing their internal security and the fight against terrorism. In this regard, allow me to remind you that tomorrow, 11 March, we commemorate the European Day in Remembrance of Victims of Terrorism. Spain has firmly placed this issue on the agenda of both the European Union and the United Nations, an issue of vital importance to us. We must continue to take steps through the EU in the efforts that we have been backing in Spain to homogenise attention for victims, affording them the dignity they deserve and highlighting the importance of their story in the fight against terrorism.

The Conclusions we have approved at the European Council expressly point out the importance of remembering this day: 11 March. And, along the same lines, a meeting was held this morning under the auspices of the European Commission, attended by a government representative. We are seeking to foster care for victims as a priority for everyone, together with the institutions and Member States.

Finally, this morning we have once again met on an informal basis, this time without the presence of the United Kingdom, to debate the future of Europe within the framework of the preparation for the Rome Summit. As you all know, on 25 March we will commemorate in Rome the 60th anniversary of the signing of the Treaties and, at a time in which the European Union faces significant challenges, the declaration we finally agree on in Rome must be capable of marking a turning point and sending out a message of encouragement, of trust and unity with a view to the future. Spain has been working to this end in recent months: with the southern Mediterranean countries in Lisbon, on 28 January; then with the 27 Member States in Valletta, on 3 February; and, finally, with France, Germany and Italy in Versailles, last Monday. On another note, we consider that the White Paper presented by the President of the European Commission on 1 March is a useful contribution to this debate.

I have always defended a very clear position, which is based on three cornerstones: first, the European Union is a success story; second, that we must do more in Europe at this time to respond to the concerns of our citizens, and what we have done over these last 60 years is not enough by itself, but rather that we must look to the future and offer a new horizon to our citizens.

Firstly, I believe that the people of Europe must assert the success, at all levels - well-being, security, economic prosperity - of the European integration project.

Secondly, in Rome the European Union must offer concrete responses to the questions that most concern European citizens at this time. These are the priorities we identified and listed on the Bratislava Agenda: first, economic and social development, which means economic growth, job creation, above all with particular attention on young people, all of which serves to strengthen our Welfare State, guaranteeing universal pensions, healthcare and education; second, internal and external security, and the fight against terrorism; and third, a policy on humane and generous, but also effective, immigration, that resolutely fights the mafias that traffic human beings, whilst providing help to those countries from which many people have to leave because it is impossible to live there under minimum conditions of dignity.

Thirdly, we need to look to the future. At an economic level, the role of the Euro and of the Monetary Union is essential in this regard. We must ensure that the European Union operates efficiently and that its benefits filter down to all its citizens. This for me means greater integration. To achieve that, we must complete the Banking Union and make further progress on structural reforms so that our economies can operate on a more similar basis and are better prepared to respond to economic crises. And all of this should allow us to move towards a Fiscal Union in the future. This means, in the last instance, having a European Budget with the ability to support those States which, at any given time, are facing an economic crisis.

In short, ladies and gentlemen, I thank you for your attention. I believe that this has been a very important European Council. This meeting has assuredly addressed key issues for the future of Europe; the last point I mentioned is probably the most important. After 60 years with a continuous process of European construction - this began in Rome, or even earlier but formally in Rome with the Treaty signed in 1957 - now is undoubtedly the right time to see what we are going to do in the future.

My position is very clear, based on Europe, as I said, being a success story; it still remains the best region of the world in terms of democracy, liberty, human rights, the rule of law, the main fundamental values; it still remains the best place in the world in terms of caring for its citizens; there is no other region in the whole planet with pension, healthcare and education systems such as those in the European Union; it is the leading trading power in the world; it is, together with the United States, the leading economic power in the world and it is where so many people who live on other continents want to come.

This has been a success story and it is now time to take another step forward, principally to address those priorities I mentioned before, which are economic growth, above all employment, to maintain and improve these pensions, this healthcare and this education, the fight against terrorism, thereby generating greater security in Europe.

Lastly, the commitment to the future which, in the case of Spain, has always been and will remain greater European integration. Work is already being done on foreign policy and defence, and on security policy, but we must also take further steps to complete the Economic and Monetary Union.

We have also addressed the issues that I mentioned before, above all the economic issues relating to growth and job creation. Today's outlook is undoubtedly much better than the one we were facing in 2012, which is when we started to attend these European Councils. And there is another figure that we must highlight: Europe has gone through a very serious crisis. You will remember that in 2012, there was even talk of the disappearance of the Euro and of the European Union, Europe with the Euro and Europe without the Euro... Well, in the end, following the decisions taken by Member States to undertake reforms and the decisions taken by the European institutions, things have now changed. In Spain, this year will be good from an economic perspective, our forecast is for growth of 2.5% and the creation of more than 400,000 jobs, but we are working to beat this figure and this forecast for economic growth, and also so that more jobs can be created in 2017.

I will end now and take any questions.

Q.- Excuse me, President of the Government, but do the job figures include the impact of Brexit? We have read a report in "El País" that leads us to understand that growth may be significantly less than forecast. To what extent will you need to readjust your economic policy to take into account the impact of the exit of the United Kingdom?

President of the Government.- The impact of the exit of the United Kingdom is something that is still unknown at this time. The United Kingdom has not even asked for or presented its request to formally leave the European Union. What we are doing, as I imagine any other responsible country is doing, is looking at different potential scenarios to see the effects that Brexit may have. What is clear is that Brexit is not good for the general interests of the European Union. All the Member States will have to contribute more money for one simple reason, because one of the most significant net contributors is leaving.

But, having said that, and regardless of whether it needs to be studied in detail, looking at all the scenarios, seeing how the negotiations go and looking at the consequences that may derive therefrom, I am in a position to say today that in 2017, if there is no foolishness and a minimum level of stability is maintained, then this will be a good year economically for Spain. I can tell you that we will grow by at least 2.5%, I believe that the unemployment figures will be good and hence, we must persevere with the policies we have implemented.

Q.- Another question about Brexit, but on another plane, regarding the transfer of the European Medicines Agency from London. The minister, Dolors Montserrat recently stated her support for the candidature of Barcelona and this week a resolution was approved in the Lower House for the government to take steps to back the candidature of Barcelona. I would like to know what plans the government has to advocate this and if you could confirm your support.

President of the Government.- Yes, I can confirm my total and absolute support, as my parliamentary group has done and as was indeed announced a short time ago by the Minister for Health, Social Services and Equality. We will try and achieve this. You are aware that there are two institutions that will leave London: one is the European Banking Authority (EBA) and the other is the European Medicines Agency, and logically Spain is interested in the Medicines Agency coming to our country.

We are going to present Barcelona's candidature and, following that, there will be, as in so many facets of life, a debate in which I am absolutely convinced that there will be others that also want to host the Medicines Agency. But let me tell you what is true: Spain has the fourth highest GDP in the Eurozone; and shortly the fourth highest in the European Union; it is a country with more than 46 million inhabitants; it is a country that has suffered a serious economic crisis, but the people of Spain as a whole have shown they have sufficient courage and determination to overcome this; and it is now one of the most important countries in Europe. Hence, we will bid for the Medicines Agency and it would be wonderful if we could manage to attract this to Barcelona.

Q.- President of the Government, I wanted to ask you about relations with Ciudadanos. Are you concerned by the rapprochement between Ciudadanos and the Socialist Party and Podemos? Have you spoken in the last few hours with Albert Rivera or do you plan to do so?

President of the Government.- That was not an issue at today's meeting, it didn't come up… But I will answer it anyway, although it didn't come up at today's meeting.

We have signed an agreement with Ciudadanos and that agreement remains in force. If Ciudadanos reaches other agreements with Podemos or with anyone else, that is its decision and I must respect that. At any event, I would like to say that I am satisfied at how this agreement is being complied with. As always happens when two political forces reach an understanding, there will always be discrepancies, but we will resolve them, have no doubts whatsoever about that, and in a civilised manner, that is, through talking and both parties making an effort to understand the position of the other.

Hence, I remain calm on this issue. I am heavily focused on economic policies, on maintaining this recovery, this growth and level of job creation, but we will talk about whatever those who signed an agreement with us wish to. In all honesty, few would think, after what happened in 2016 that we would be able to look at this year, 2017, with so much optimism in areas that really interest our citizens as a whole.

Q.- I wanted to know whether you could at least confirm for us some of the figures published today in "El País", for example, that the Spanish economy will grow by between two and four-tenths less, the exports that we will lose… If you could at least confirm some of these figures being quoted in certain areas.

Then, there has been a great deal of talk about what we are going to lose with Brexit; but I also wanted to know whether Brexit could offer Spain any new opportunities; whether, for example, as we said, the Medicines Agency, the EBA or investment banks could re-locate to our country. Do you have any examples that could offer us some hope or something positive.

President of the Government.- I cannot confirm any figures for you, because these are potential scenarios that all our countries are looking at. Just remember that we are talking about something which, in the best case scenario, will take place - the withdrawal of the United Kingdom - two years after it formally requests to leave which will foreseeably take place - we believe - in this month of March. We are thus talking about something that will take place within two years.

And furthermore, and this is another fact that I believe is also very important, we have not yet started to negotiate under what conditions they will leave and what the future situation and relationship with the United Kingdom will be. It is not the same to have a free trade agreement as to have a different kind of relationship; in other words, we don't know what kind of customs tariffs there will be, we don't know how the Euro will develop, nor do we know how the Pound Sterling will develop. In other words, what everyone is doing is looking at potential scenarios.

What I can say is that, in the situation we find ourselves in today, the forecasts for the Spanish economy for the years 2017, 2018 and 2019 are all positive. Now, trying to guess, without any figures available, because we haven't even started to talk, that is truly impossible. What we are doing is laying out potential scenarios because, I repeat, any responsible government must be well aware that the more it has studied the situation, the better position it is in. But to say at this time that one billion euros will be lost in exports, is that a lot? One billion euros in exports is between 0.2 and 0.4% of Spain's exports. It is not a lot, but nor do we know that one billion euros will be lost in exports. If there is a free trade agreement, exports may perhaps even rise.

Hence, I repeat, these are potential scenarios and I would ask that you view them as such, and I clearly don't want to accidentally lie to you saying one thing that cannot really be answered until we can see how the negotiations are going and, above all, what Spain's future relationship will be with the United Kingdom.

Q.- President of the Government, you mentioned that, provided there is no foolishness, and that if there is certain political stability, and also budget stability, Spain could continue to grow by at least 2.5%. To ensure this budget stability, there is one political party - the Basque Nationalist Party (Spanish acronym: PNV) - that could be very important. Yesterday, it announced that on Wednesday it wants to decide or announce who its new budget partner will be, which is between the PP and Bildu. I don't know whether you have now decided to support the Budget of the Regional Government of the Basque Country as a bargaining chip in exchange for the PNV's support for the Budget in the Lower House of Parliament and whether you are personally involved in this negotiation so that it can be said that it prospered thanks to you.

President of the Government.- Those are two questions. A bargaining chip, no; it is clear that this is not a case of swapping cards. What this consists of is building something. It is clear that the PNV has a coalition with the Socialist Party in the Basque Country and it is clear that this is not enough, as you know, to approve the Budget. We are willing to talk because we want to build, because it makes no sense to paralyse the approval of a Budget. That contributes absolutely nothing to our citizens as a whole; what's more it is actually prejudicial to them. Hence, it makes no sense and, in fact, we have already approved, as you know, the "ceiling on spending" which was presented at the time by the Regional Government of the Basque Country.

Hence, we are prepared to talk. I am not heading up these negotiations directly and cannot give you any further information, but what I can say is what I have just said.

Second, am I involved? Yes, I have held some meetings with certain leaders of the Basque Nationalist Party but, as you would expect, I am not involved with the details of the Budget, because these are normally talked about with the Minister for the Treasury. But, if you ask me whether I have met with leaders of the Basque Nationalist Party, then my answer is "yes", in the same way as I have met with the rest of the political forces. With the rest of the political forces that you have in mind; not the others, of course.

Q.- President of the Government, you spoke about political stability. Do you think this political stability in Spain is in jeopardy? Because, apart from the tension with Ciudadanos that there has been in recent days, the Budget is still up in the air and what happens with the Socialist Party in the month of May is also pending. In other words, is this stability in jeopardy and to what extent could this lead to early elections?

President of the Government.- I have already said, but I will reiterate that now, that I don't want to call early elections, because that would be harmful to Spain; quite simply for that reason. We already spent 10 months with a caretaker government and it was only because of the reforms we had undertaken that we were able to maintain good levels of economic growth and job creation, but what is positive, sensible and reasonable is to have stability. Hence, I am not going to get involved with mind games of saying "I will now call early elections" after already having held two general elections not long ago.

So, analysing what is going to happen, whether there is a danger or not… Here we have 137 seats, which is exactly the same number as when we started this legislature, and my obligation is, with 137 seats and the pacts I have reached with Ciudadanos and with the Canary Island Coalition, which does not amount to an overall majority, to continue looking for support so that the most important issues that affect the people of Spain as a whole can be pushed through. That is what I am doing and that is what I will continue doing in the future. Then, everyone can make their own decisions and take on their own responsibilities; but mine is to try and ensure that those issues that are important to the Spanish people are approved and, for the time being, I believe that some steps have been taken in the right direction. The key is to continue consolidating this in the future.

Q.- I understand that Spain will present the candidature of Barcelona to host the European Medicines Agency. Does that mean that we are renouncing our candidature for the European Banking Authority?

Then, as regards Banking Union, do you see any possibilities of completing the Banking Union in regards to the Deposit Guarantee Fund this year?

President of the Government.- In relation to your second question, I believe that this is difficult. Quite frankly, I believe that this is difficult although it is an issue that is now being addressed by economic councils. In fact, I believe that at the latest council meeting, which must have taken place on Monday, there was a quite extensive debate on this issue. But, I repeat, completing the Banking Union appears as one of the goals at all the meetings of the European Council that we have held. Now, do the political circumstances help? You will have to evaluate that, because I am not very sure of that. It is difficult but, at any event, this is a goal which I am absolutely convinced will be achieved soon, like Fiscal Union. The thing about Fiscal Union is that it will almost certainly arrive after Banking Union.

In relation with…, I am not renouncing anything; but, in short, I don't think it would be very reasonable, since there are two major agencies, for both of them to come to Spain. It is better to have goals that can be achieved; if not, we become frustrated and depressed if we fail to get everything we want.

Q.- I wanted to come back to the issue of Brexit, to the future of the European Union when de UK leaves which, as you have said, is a net contributor to the European Budget. Do you think that the fact that those countries that stay in the EU will potentially have to pay more money will be a source of confrontation in the European Union?

My other question is whether Spain has the figures on how much the exit of the United Kingdom would amount to compared with its economic contribution to the European Union.

President of the Government.- As I said before, we must be very cautious. First, let's wait and see when the United Kingdom actually leaves, that is the first thing; and second, let's see under what conditions the United Kingdom leaves. Until that happens, we cannot do anything. I appreciate that we want to know everything, but it is impossible. I cannot tell you what I don't know and cannot know at this time. What I can say is that Brexit is not good news, it never was, and not only for economic reasons, which are not so important, but rather because it does not send out a good message.

Aside from that, will this be a bone of contention for the other 27 members? I imagine that exactly the same will happen as has happened since the European Union began to operate: everyone wants to contribute the least possible and receive the maximum possible. In the end, since these things must be unanimously approved, as has always been the case, we will end up reaching an agreement. Hence, from this point of view, I am calm.

Earlier I was asked whether there will be new opportunities with the exit of the United Kingdom. The opportunities are out there. And the agreement with MERCOSUR? That would be very important; it is a very large market; moreover, for us it holds a very symbolic value.

And Mexico? We have managed to insert it as a priority in the minutes of the European Council from this week. That is very positive, we already have an agreement with Mexico which dates back to 1992. Mexico is a country with 100 million inhabitants; we have all sorts of ties with Mexico and we will have an opportunity there.

The free trade agreement with Japan is very likely to be firmed up soon, probably before the Banking Union. That is also an important issue.

The opportunities are out there. What happened in Spain during the last crisis, because that was indeed a great opportunity? In Spain, a decisive factor for our recovery from this period of five straight years of negative economic growth, which is easy to say, was the overseas venture by Spanish companies, including small- and medium-sized enterprises that had never before sought to expand abroad. And we have now enjoyed four straight years with a foreign trade surplus, something unprecedented in our country. Because they took the opportunities; a culture of exports has now been nurtured and that is fantastic. Whenever Spain has gone abroad, things have always gone well for us. That is why we back free trade agreements and the expansion of companies overseas.

The world is not the same today as it was 50 years ago, or 40 or even 30; today we live in a very open world, you have to be out there and grasp all the opportunities available, and be prepared to pack a bag and to battle in other places and open up markets that didn't exist before. Fortunately, the market is no longer only Spain or the European Union; the market, for everyone who wants, is very open. Things may then be difficult, but nothing in this life is easy.

I will end now, ladies and gentlemen. Thank you very much.