Spain will continue leading growth and job creation if budget stability and reforms are maintained, says Mariano Rajoy

Casino de Madrid

Mariano Rajoy recalled his comments at this same forum back in April 2012, when he had only been in power for a few months, that the only possible path was that of austerity, sacrifice and reforms given that the Spanish economy was experiencing the most serious crisis of the last 60 years.

He went on to say, back then, that the first question he used to be asked when speaking to the press was always about when he was going to ask for a bailout. "Not much time has passed", he said, "but many things have happened, those we have all had to do together to pull Spain out of that predicament and return to the path of balance and sustained, stable growth". Achieving that goal, he explained, was made possible thanks to the efforts by business leaders and employees, and a policy of structural reforms and fiscal consolidation.

Balanced growth and rapid job creation

The President of the Government believes that the current situation reflects "a sharp U-turn" given that Spain today is growing and creating jobs "with a more balanced and sustainable growth model in which the foreign trade sector and our competitiveness play a key role". Mariano Rajoy stressed that Spain has the fastest-growing major economy in the Eurozone. This pace will enable Spain to recover pre-crisis GDP levels in the first half of this year.

Furthermore, he stressed that this growth is translating into "rapid job creation": in the last two years, the Spanish economy has created 25% of all jobs in the Eurozone and 40% of all jobs for young people, and has helped lower unemployment by 50%. That positive trend, he added, is being maintained at the start of 2017. This can be seen from the latest Labour Force Survey and the National Insurance figures for the month of April.

Mariano Rajoy attributed these figures to the improved competitiveness of the Spanish economy, which is now exporting one third of its Gross Domestic Product. This figure is higher than such competitors as Italy, France and the United Kingdom. The dynamic nature of Spanish exports has also led to a positive foreign trade balance in the last four years.

"And all this", stressed Mariano Rajoy, "has been achieved while maintaining high levels of social protection". Over 14 million people, he said, receive some sort of benefit or subsidy every month in Spain, not including student grants. "Thanks to these efforts to maintain a high degree of social cohesion, it has been possible to survive the toughest days of the crisis without serious social conflict and reach our current path to recovery", he said.

Responsibility in the General State Budget

Pool Moncloa/Diego CrespoMariano Rajoy argued that, "if the same economic policy is continued, it will be possible to maintain our position in terms of growth and job creation as leaders in Europe".

He recalled that government forecasts show that the economy will grow by 2.7% this year and by an average of 2.5% to 2020, and that the unemployment rate will fall by two points a year to stand at close on 11% at the end of 2020. Furthermore, the public deficit will fall below 3% in 2018 and the current account balance will be positive for another four years. In the European Union as a whole, there will also be at least three straight years of growth.

Maintaining the upward trend of the Spanish economy, he said, requires ongoing fiscal consolidation, ongoing structural reforms and that we maintain those already in place. "Going back on all the decisions already taken would be a dreadful message", he claimed.

As regards budget stability, he stressed that his government has reduced public spending every year and that the 3.1% deficit target for 2017 will be reached "without the need for additional adjustment measures". Furthermore, he highlighted the importance of approving the General State Budget in Parliament. "Approving the budget", he said, "is an exercise in responsibility for us all".

Improved training and competitiveness

As regards the necessary structural reforms, Mariano Rajoy firstly mentioned the measures aimed at job creation and for jobs to be "more inclusive and of higher quality". He said the Government of Spain will work to improve the results from its active employment and training policies, especially those aimed at young people and the long-term unemployed, as well as from digital training, professional training and dual professional training. Furthermore, the Government of Spain will "do everything within its power" to comply with the Education Pact, subject to an open debate in the Lower House of Parliament.

Pool Moncloa/Diego CrespoSecondly, Mariano Rajoy advocated measures for the goods and services markets capable of increasing the competitiveness of the economy - energy, infrastructure, digital agenda and financial sector - and eliminating bureaucratic burdens on companies within the framework of the Law on Guaranteeing Market Unity.

Other reforms that the Government of Spain considers important, he added, are those aimed at supporting entrepreneurial initiatives and business development, promoting the digitalisation of the economy and continuing to modernise the public authorities. "Hiring processes need to be simplified and improved, progress needs to be made - and we are making it - on digitalising the public administration and legislative processes need to be improved", he explained.

Innovation and research, the fight against climate change, the demographic challenge and regional financing are other core aspects of the reform agenda, said the President of the Government.

Launching these initiatives means they need to be agreed upon because the party in power only holds 137 seats, explained Mariano Rajoy. "We will be able to implement some reforms provided there is a little sense from all those who sit in the Lower House of Parliament", he said.

Relations with the United States

During the Q&A session after the event, Mariano Rajoy explained that he held talks with the President of the United States, Donald Trump, "under very reasonable terms" and that he was invited to the White House. "I told him of our intention to build better relations in all areas possible. He said something similar and told me that we should go to the White House whenever we want; that we will set a date in the future", he said.

Pool Moncloa/Diego CrespoAs regards NATO and foreign affairs policy, the President of the Government said that he sees no substantial changes following the arrival of Donald Trump. In his opinion, the free trade treaty between the United States and the European Union being negotiated "with great difficulty" is essential. "If that treaty could be put in place, I think European GDP and the number of jobs would go up significantly", he said.

Mariano Rajoy recalled that the European Union has closed a deal with Canada, believes another could be closed with Japan and that there will be "significant progress before the end of the year" on the agreement with MERCOSUR. The President of the Government added that "we need to be realistically optimistic" defending the positions adopted by Spain.

Withdrawal by the United Kingdom from the EU

The President of the Government said that negotiations on the withdrawal by the United Kingdom from the European Union "will be very complicated". He insisted that "we cannot talk seriously about this issue" until the results from the early British elections are known, which will be held on 8 June.

Mariano Rajoy said that the European Union "is clear on what it has to do", given that the other 27 Member States have reached an agreement on supporting the negotiator, Michel Barnier, and acting together. "Being in Europe is not the same as not being in Europe, and that will inevitably be reflected somewhere", he said.

France and the future of the EU

The President of the Government described the results of the elections in France as "excellent news", which joins the predictions made by the President of the European Central Bank indicating a good economic outlook for Europe.

In this regard, Mariano Rajoy stressed that "a quintessential part of the European project" and something that is explicitly acknowledged in the Treaty of Rome is for Europe to have a welfare, healthcare and education system unlike any other part of the world, more effective action must be taken to resolve the problems experienced by the public and progress on the integration process must be a priority.

Furthermore, the President of the Government highlighted the importance of defence policy. "We must have a European defence policy that is compatible with NATO; we have to integrate ourselves more in foreign affairs policy", he said. He also advocated the need to achieve progress on the Monetary Union. "The major debate for the near future will be whether to have a European Budget and Eurobonds", he stated.