Canarian Weekly
28-09-2012, 10:50
AS many had predicted, the budget for 2013 is harsh, according to immediate reaction from analysts. As we go to press we bring you live coverage of the announcement that will determine the immediate future of the country and its relationship with the rest ofEurope. Speaking outside the cabinet office, Government Deputy Prime Minister Soraya Saenz de Santamaria began the announcement with a statement saying that there will be a new independent budgetary authority, which will monitor deficit reduction and government spending.
She said that some 43 new laws to reform the Spanish economy will be put forward over the next six months.Spainwill adopt new measures to reform public administration and deepen labour market reform. Energy, services and telecom sectors will be liberalised further. A new car scrapping scheme will be introduced to try and boost the automotive sector.
As expected, the Government will adopt measures to limit early retirement and will also put its hand into the state social security reserve fund to remove three billion euros in order to cover liquidity problems inSpain’s old-age pension system.
Luis De Guindos, Finance Minister, announced measures to dissuade people from taking early retirement, rather than do anything more radical, such as raising the age from 65 to 67, as had been predicted in some quarters.
Guindos was repeatedly stressing how each reform is in line with European recommendations. Analysts are already commenting that by keeping close to recommendations made by the European Commission, both Brussels and Madrid believe that, if a request for bailout aid comes, eurozone lenders will not impose more onerous conditions on them in return for the assistance.
On whether the country will head toBrusselsto seek a full-scale rescue, Guindos says thatSpainis still analysing conditions of the ECB bond buying programme, and that a decision will be made when the impact onSpainand the eurozone is fully known.
Spanish Treasury Minister Cristobal Montoro, said he sees a “soft recession” in 2013, which he hopes will be the last year of the crisis. The actual growth number is -0.5 per cent. Montoro says adjustment in spending will be worth 0.77 per cent ofGDPin 2013. Adjustment in revenue will be worth 0.56 per cent ofGDP. These cuts are aimed at chopping 40 billion euros offSpain’s budget deficit next year.
The government believes unemployment has bottomed out and is predicting an average rate of 24.3 per cent for next year.
Absolutely terrible news for Spaniards: in future, lottery wins over 2,500 euros will be taxed for the first time at a rate of 20 per cent under the new gambling tax.
More seriously, Montoro says the interest bill onSpain’s public debt will rise next year from 28.8 billion in 2012 to 38.6 billion. That is higher than expected and will wipe out almost all the increased take from VAT.
Also in the mix were figures stating that the tax take next year would rise from 170 billion to 175 billion. Government ministry spending will fall by 8.9 per cent.
The government announced that it wants its people to take away the message that with all the spending cuts, just under 64 per cent of its budget will still go on what it calls “social spending,” such as pensions, benefits, etc.
As we go to press, the Ministers are taking questions. In our issue next week we will bring readers a fuller analysis of what this 2013 budget could signal for the future.
But as readers will recall, before the release of the budget details, Prime Minister Mariano Rajoy stressed his commitment to fiscal and structural reforms, saying that all segments of Spanish society will need to make sacrifices.
“We know what we have to do, and since we know it, we’re doing it,” he said in a speech during his trip toNew York, while violent protests engulfedMadridfor a second day in a new round of anti-austerity demonstrations. More than 1,000 riot police blocked off access to the Parliament building in the heart ofMadrid, forcing most protesters to crowd nearby avenues and shutting down traffic at the height of the evening rush hour.
The demonstration, organised with an “Occupy Congress” slogan, drew protesters from all walks of life weary of nine straight months of painful economic austerity measures imposed by Rajoy and his solid majority of lawmakers.
Spainis struggling in its second recession in three years with unemployment near 25 per cent. The country had introduced austerity measures and economic reforms in a bid to convince its euro partners and investors that it is serious about reducing its bloated deficit to 6.3 per cent of gross domestic product in 2012 and 4.5 per cent next year.
The deficit reached 50.1 billion euros, equivalent to 4.77 per cent ofGDP, through August, the government said.
European markets, which dropped sharply on increased fears forSpainand the euro crisis, edged higher as they awaited news onSpain’s new policies.
Rajoy was expected to unveil plans that would go some way towards addressing reforms requested by the EU and win over sceptical investors. Investors who fear thatSpain, the eurozone’s fourth largest economy and now at the centre of the debt crisis, cannot control its finances and that Mr Rajoy does not have the political will to take unpopular measures.
However, his attempts to cut the country’s debt and reduce its deficit are hampered by public anger, falling tax revenues and a shrinking economy. The Bank of Spain said on the day before the budget that the economy had shrunk at a “significant rate” in the third quarter, with all major indicators deteriorating.
Rajoy has been reluctant to ask for aid until now, saying that he would not request a full sovereign bail-out unless borrowing costs go “too high, for too long”.
Spainis negotiating the terms of a European aid package that would trigger a European Central Bank bond-buying programme and easeMadrid’s unsustainable borrowing costs.
However, protests against cutbacks make it more difficult for the Prime Minister to request aid or to implement austerity measures, a condition forSpainto receive support from the European Central Bank
More... (http://www.canarianweekly.com/spain-announces-spending-cuts/)
She said that some 43 new laws to reform the Spanish economy will be put forward over the next six months.Spainwill adopt new measures to reform public administration and deepen labour market reform. Energy, services and telecom sectors will be liberalised further. A new car scrapping scheme will be introduced to try and boost the automotive sector.
As expected, the Government will adopt measures to limit early retirement and will also put its hand into the state social security reserve fund to remove three billion euros in order to cover liquidity problems inSpain’s old-age pension system.
Luis De Guindos, Finance Minister, announced measures to dissuade people from taking early retirement, rather than do anything more radical, such as raising the age from 65 to 67, as had been predicted in some quarters.
Guindos was repeatedly stressing how each reform is in line with European recommendations. Analysts are already commenting that by keeping close to recommendations made by the European Commission, both Brussels and Madrid believe that, if a request for bailout aid comes, eurozone lenders will not impose more onerous conditions on them in return for the assistance.
On whether the country will head toBrusselsto seek a full-scale rescue, Guindos says thatSpainis still analysing conditions of the ECB bond buying programme, and that a decision will be made when the impact onSpainand the eurozone is fully known.
Spanish Treasury Minister Cristobal Montoro, said he sees a “soft recession” in 2013, which he hopes will be the last year of the crisis. The actual growth number is -0.5 per cent. Montoro says adjustment in spending will be worth 0.77 per cent ofGDPin 2013. Adjustment in revenue will be worth 0.56 per cent ofGDP. These cuts are aimed at chopping 40 billion euros offSpain’s budget deficit next year.
The government believes unemployment has bottomed out and is predicting an average rate of 24.3 per cent for next year.
Absolutely terrible news for Spaniards: in future, lottery wins over 2,500 euros will be taxed for the first time at a rate of 20 per cent under the new gambling tax.
More seriously, Montoro says the interest bill onSpain’s public debt will rise next year from 28.8 billion in 2012 to 38.6 billion. That is higher than expected and will wipe out almost all the increased take from VAT.
Also in the mix were figures stating that the tax take next year would rise from 170 billion to 175 billion. Government ministry spending will fall by 8.9 per cent.
The government announced that it wants its people to take away the message that with all the spending cuts, just under 64 per cent of its budget will still go on what it calls “social spending,” such as pensions, benefits, etc.
As we go to press, the Ministers are taking questions. In our issue next week we will bring readers a fuller analysis of what this 2013 budget could signal for the future.
But as readers will recall, before the release of the budget details, Prime Minister Mariano Rajoy stressed his commitment to fiscal and structural reforms, saying that all segments of Spanish society will need to make sacrifices.
“We know what we have to do, and since we know it, we’re doing it,” he said in a speech during his trip toNew York, while violent protests engulfedMadridfor a second day in a new round of anti-austerity demonstrations. More than 1,000 riot police blocked off access to the Parliament building in the heart ofMadrid, forcing most protesters to crowd nearby avenues and shutting down traffic at the height of the evening rush hour.
The demonstration, organised with an “Occupy Congress” slogan, drew protesters from all walks of life weary of nine straight months of painful economic austerity measures imposed by Rajoy and his solid majority of lawmakers.
Spainis struggling in its second recession in three years with unemployment near 25 per cent. The country had introduced austerity measures and economic reforms in a bid to convince its euro partners and investors that it is serious about reducing its bloated deficit to 6.3 per cent of gross domestic product in 2012 and 4.5 per cent next year.
The deficit reached 50.1 billion euros, equivalent to 4.77 per cent ofGDP, through August, the government said.
European markets, which dropped sharply on increased fears forSpainand the euro crisis, edged higher as they awaited news onSpain’s new policies.
Rajoy was expected to unveil plans that would go some way towards addressing reforms requested by the EU and win over sceptical investors. Investors who fear thatSpain, the eurozone’s fourth largest economy and now at the centre of the debt crisis, cannot control its finances and that Mr Rajoy does not have the political will to take unpopular measures.
However, his attempts to cut the country’s debt and reduce its deficit are hampered by public anger, falling tax revenues and a shrinking economy. The Bank of Spain said on the day before the budget that the economy had shrunk at a “significant rate” in the third quarter, with all major indicators deteriorating.
Rajoy has been reluctant to ask for aid until now, saying that he would not request a full sovereign bail-out unless borrowing costs go “too high, for too long”.
Spainis negotiating the terms of a European aid package that would trigger a European Central Bank bond-buying programme and easeMadrid’s unsustainable borrowing costs.
However, protests against cutbacks make it more difficult for the Prime Minister to request aid or to implement austerity measures, a condition forSpainto receive support from the European Central Bank
More... (http://www.canarianweekly.com/spain-announces-spending-cuts/)