"The Budget closes a very difficult phase and opens a new period of sustained growth and job creation", says Mariano" Rajoy

Moncloa Palace, Madrid

In his speech, in which he took stock of the term of office, the President of the Government claimed that the General State Budget for 2016 "sets out a path that allows the various economic agents, both public and private, to make their forecasts and take strategic decisions against a horizon of stability".

The President of the Government underlined that "our economic recovery is clearly confirmed" and that Spain is the OECD country where employment has grown most sharply. "Recovery is here. You can look for all the blemishes you want in this reality, but this change is not open for argument, and it is increasingly filtering down to more people", he said.

Pool MoncloaMariano Rajoy highlighted that the Budget continues with the task of fiscal consolidation. "Next year we will enjoy a primary surplus and we will come out of the excessive deficit process of the European Union. To achieve this, we are going to reduce the ceiling on spending by 4%. In other words, we will spend 5.6 billion euros less than in 2015 thanks to the savings deriving from economic growth".

Moreover, he underlined that the autonomous regions will receive 8.7% more financing, with an increase of 7.4 billion euros, 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, some 10 billion euros in resources that will be allocated to maintaining essential public services, such as healthcare, education and social services.

The President of the Government announced that the public accounts provide 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 balance out the system again".

He also explained that the improvement in the country's economy will help redress, little-by-little, the efforts made by public sector workers, who will enjoy a 1% rise in their salaries, the first in the last five years. "This year, they will recover another quarter of the extra payment from 2012, and the remaining 50% over the course of 2016".

Mariano Rajoy also pointed out that 53.5% of the Budget will be given over to social spending, an increase of 3.8%. "In Spain, we have managed to overcome the most difficult periods of the crisis whilst maintaining the pillars of the Welfare State. More than 13 million Spaniards received some form of social protection income last year, whether pensions, for care, re-insertion income or unemployment benefits", he indicated.

In short, he said, "this Budget closes off a very difficult period for everyone in Spain and opens up a new period of sustained growth and heightened job creation". "This 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".

Balance of the term of office

The President of the Government pointed out that the approval of the public accounts culminates a political cycle in which the tax reform has been adopted, the effects of which are already being felt in economic trends. "By the end of this term of office, the people of Spain will pay less Personal Income Tax than at the beginning. And if economic recovery is maintained, we will propose new tax breaks in the future", he announced.

Pool MoncloaOther measures listed by Mariano Rajoy include the reform of the public administration services, which have led to a saving of 30 billion euros, and the reform of vocational training for employment, which seeks to improve the situation of people with the greatest difficulties in getting back into the labour market. He also referred to the measures approved to fight corruption, including the improvement in the concept of confiscation so that those convicted of these offences "return to society that which they have stolen", and the creation of the Transparency Portal.

The key to this change, according to the President of the Government, has been that Spain has now enjoyed eight straight quarters of economic growth and that the forecasts point to growth of 2.9% being posted this year, higher than the other Eurozone countries and the United States.

Public deficit, prices, and foreign trade sector

In relation to the public deficit, Mariano Rajoy recalled that Spain started in a situation that was out of control, with a deficit of 9% and a divergence of 50% from the scheduled target of 6%. At present, the corrective path places the deficit next year at 2.8% and foresees a zero deficit within a couple of years. In his opinion, it is fundamental to maintain balanced policies in order to generate confidence both within Spain and abroad. He also stated that the correction will not come from reduced spending but from economic growth.

Pool MoncloaIn relation to prices, the President of the Government argued that for the first time ever, the sharp growth in the Spanish economy has not been accompanied by escalating inflation which, according to the data announced, 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", and that is positive because "our people do not lose purchasing power", he said.

Mariano Rajoy commented that record exports have also helped transform the economy. "We are growing in a healthy and balanced manner, with moderated prices and a huge role being played by the foreign trade sector. At present in Spain, the proportion of the Gross Domestic Product from exports is higher than France, Italy or any other major OECD country, with the sole exception of Germany".

Job creation

In relation to employment, Mariano Rajoy stressed that there are half a million fewer people unemployed and more people contributing to the social security system than when he came to power. "I would remind you of the figures from the latest Labour Force survey: 411,000 new jobs in the last quarter and 513,000 in year-on-year terms".

Moreover, he argued that in the last 12 months, 56% of those people who have left the unemployment queues in the whole of Europe are in fact Spanish, according to figures released by the Economic Office of the European Commission. "Unemployment is currently falling at a rate of 7.4% year-on-year and the number of National Insurance contributors is growing at a rate of 3.4% year-on-year", he highlighted.

Pool MoncloaOn this issue, Mariano Rajoy summarised the current situation by pointing out that during this term of office, we have all made progress in the general recovery and modernisation of Spain and that we now have a more healthy economy, which is growing and creating jobs at historic levels. Moreover, the government has lowered taxes, increased family protection, streamlined the public administration services, boosted international forums for debate on the main challenges, such as Jihadi terrorism and illegal immigration, and Spain has earned a place on the UN Security Council.

The President of the Government declared that Spain is better off today than a year ago and much better off than it was when he came to power at the end of December 2011. Moreover, he expressed his wholehearted conviction that "if we continue maintaining those policies that we have been implementing in recent times now that we have a greater budgetary margin", the situation of those people who as yet have been unable to find a job can be resolved.

The government will defend Spain's unity

In terms of future challenges, the President of the Government stressed that the government will ensure that the law is upheld and will actively defend it. In this regard, he reiterated that there will not be elections of a plebiscitary nature in Catalonia because the law forbids this. "There will be elections to the Parliament of Catalonia, but there will not be elections of a plebiscitary nature, just as there was never any referendum regardless of how much propaganda they sought to make out of this".

"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 as Catalans, Spaniards and Europeans. We don't want them to leave Spain, and hence, to leave Europe", he emphasised.

Greek crisis

As regards the situation in Greece, the President of the Government trusts that the technical talks on the third bailout are progressing satisfactorily and that an agreement can be swiftly reached that clears away the uncertainties once and for all. "I hope that the crisis we have seen in recent times, which has been very serious, serves as a lesson to us all. Those in government are there to resolve problems and not to create them, and one way to create serious problems is to promise the impossible".