Spanish leader deems reforms and austerity measures a success

Spain's prime minister Mariano Rajoy hailed the austerity measures and reforms his government has implemented and vowed to thwart Catalan plans to break away from the country in his annual state-of-the-nation address yesterday.

Comparing newspaper headlines from 2012, when Spain was on the brink of economic meltdown, with more positive ones published recently, the prime minister said the country had turned the corner.

'Threat to hope'
"We've seen a change of trend, our course has changed," Mr Rajoy, a conservative, told Congress. "Instead of going backwards we're going forwards. We've gone from recession to recovery, from threat to hope."

The two-day debate traditionally begins with the prime minister’s review of the government’s policies and achievements and Mr Rajoy focused much of his speech on Spain’s recent return to growth after more than two years of recession.

As he took the podium there was good news from Brussels, as the European Commission doubled its estimated growth for Spain this year to 1 per cent. However, the Commission also warned that the public deficit risks overshooting its 2015 target if further structural reforms are not introduced.

The prime minister hinted that more such measures are on the way, saying that “for the same reasons and with the same resources that we have arrived at this point, we will be able to complete the remaining path to full recovery”.

He also outlined a series of new economic initiatives, including raising the tax bracket so that those who earn less than €12,000 per annum do not pay income tax and offering companies a discount on social security payments for new hirings.

Major challenge
However, he also acknowledged that a major challenge remains, with unemployment at just under 26 per cent and the youth jobless rate at more than 50 per cent.

“What country are you living in?” asked Alfredo Pérez Rubalcaba, leader of the main opposition Socialists, who accused the prime minister of complacency and wreaking havoc with his economic policy. “For millions of Spaniards, the worst is yet to come. You have had alternatives, but you have decided to go against the weakest.”

The Socialists pointed to heavy cuts to health and education spending by the present government, as well as a controversial labour reform making it easier to fire workers.

Mr Rajoy also said he would block efforts by Catalonia to secure independence through a November referendum, which the government deems illegal.