Brussels, 26/04/2013 (Agence Europe) - On Friday 26 April, the Spanish government set out the broad thrust of its stability and reform programme to be presented to the European Commission as unemployment in the country reached a record high of 6 million jobless.
In light of the lingering recession (GDP will shrink by 1.3% in 2013 before returning to growth of 0.5% in 2014), Madrid says it will now bring its public deficit back below the 3% cut-off point in 2016 rather than 2014. The new schedule will need to be validated by the Ecofin Council after the European Commission issues a proposal to this end. The government's new budget correction timeline is reduce the deficit to 6.3% of GDP in 2013 (rather than the initial plan of 4.5%), 5.5% in 2014, 4.1% in 2015 and 2.7% in 2016. Public debt is expected to continue its upward trend and peak at nearly 100% in 2016. More than 27% of the working population are expected to be out of a job in 2013, but the figure is forecast to start falling in 2014.
Believing Spain will get out of recession in “2014', Spanish economy minister Luis De Guindos said the new budget hypotheses on the basis of which the government was now working were “very cautious”, El Pais reports. The European Commission described the postponement to 2016 as “coherent”.
The Spanish government will continue with the income tax increase (that has already been introduced) until 2015. It will continue to cut public spending, particularly local spending, and will tackle the loss-making energy industry and liberalise previously protected professions. (MB/transl.fl)