Spanish Minister of Economy meets Financial Times directors

Spanish government promises to reduce budget deficit to 3%

Yesterday, the Minister for the Economy, Elena Salgado, set out the government’s plans to reduce its budget deficit during a visit to London in an attempt to calm fears about the state of the Spanish economy. Salgado met with the directors of the Financial Times who recently warned that Spain’s economy risked facing worse problems than Greece given its levels of debt and its budget deficit. The newspaper also accused the Spanish government of not taking the necessary steps to overcome the recession.

According to sources speaking on behalf of the Ministry for the Economy the visit to London was planned a while ago and the meeting with the directors of the Financial Times was a ‘mere coincidence’. However, Salgado left it to her Secretary of State, José Manuel Campa, to set out the government’s plans for consolidating the economy and structural reform in a presentation organized by Barclays, City Bank and Santander bank.

In his presentation Campa recognized that Spain faced challenges such as the reduction in the rate of unemployment (currently nearly 20%) and the reduction in its budget deficit, which it wants to reduce from 11.4% to 3% in three years. The reforms to the economy will be based on restructuring the banking system, changes to the pension laws and the raising of the age of retirement and reforms to the labour market. Campa also promised to make new cuts to public spending if the economy did not improve.

Campa said that the Spanish economy would grow slightly in 2010 and forecast that GDP would increase by about 1.6% in 2011. He also said that the strategy for consolidating the economy would be based on spending cuts throughout Spain’s public administrations and considerable cuts in investment and subsidies to regional governments equivalent to 0.5% of GDP.

Campa said that the government would gradually increase the age of retirement to 67 and on labour market reforms he said that there would be new incentives for young people and women to join the workforce and measures to control seasonal unemployment.

Last night Spain’s major trade unions CCOO and UGT made the first steps towards agreeing on the subject of salary increases for 2010 to 2012 which would be between 1 and 2.5% - 1% for 2010, between 1 and 2% for 20100 and between 1.5 and 2.5% for 2012 (in each year there would be clauses allowing for the revision of these figures so that workers would not lose bargaining power if inflation goes off track).

Yesterday, the Vice president of the government, Manuel Chaves, announced the government’s plans to generate more than 274,000 new jobs in 2010.

Spain’s stock market recovered slightly yesterday after last week’s disastrous results with a rise of 1.02%.

Support for Spanish Government falling

Latest polls indicate that PSOE is losing popularity amongst voters

Two new opinion polls published yesterday by two of Spain’s largest daily newspapers show that PSOE is losing popularity amongst voters. According to the poll carried out by Metroscopia for EL País PSOE’s electoral base has plummeted due to the lack of confidence in the government’s ability to deal with the recession.

According to this poll, the PP is now leading PSOE by 6 points which is much more than the 2.5 lead it enjoyed in January this year. It also found that 76% of those questioned for the poll were not confident in the abilities of the Spanish president, Jose Luis Zapatero, and nearly 80% believed that he took decisions ‘on the go’. Furthermore the first poll since the government’s announcement that it was going to reform retirement laws saw its support fall to 37.5% which is 6 points less than in the general elections last year. It also discovered that voters were pessimistic about Spain’s political and economic future.

These results are worrying for the government because the PP’s lead in the polls is six times more than it was in 1996 when José María Aznar won the elections and the PP took power for the first time. The opinion poll for the El País shows that the PP’s estimated vote is now 43.4%.

Spain’s European presidency has not turned out to be the tonic that PSOE was hoping for and Zapatero now needs to look for other ways of boosting his party’s popularity before the elections in Catalonia this autumn and the local and regional elections in 2011. However, the outlook for the government is not good with 64% of those questioned disapproving of the government’s plicies which is 12% more in the space of just one month. In addition 39% of PSOE voters are critical of the government.

The other opinion poll by Sigma Dos for El Mundo carried out following the government’s announcement that it was planning to raise the age of retirement to 67 showed that if a general election was held today the PP would win the election with a 5.8% lead over the socialists.

According to this survey, the leader of the PP, Mariano Rajoy, is now more popular than Zapatero. According to this poll Rajoy was given 4.21 out of 10 while Zapatero only got 4.1 out of 10. However, the most popular leader amongst those questioned was Rosa Díez who was given 4.38 out of 10.

The poll also showed that 51.1% of voters were in favour of a general election now. This opinion was held mainly by 86.7% of PP supporters while just 19.3% of PSOE supporters wanted a general election straight away. As far as changes in the Government are concerned, a high 65.8% said they were in favour of Zapatero doing a cabinet reshuffle.

Zapatero in USA

Spanish president attends the National Prayer Breakfast in Washington

At yesterday’s meeting of the Fellowship Foundation, also known as ‘The Family’, the Spanish president, José Luis Rodríguez Zapatero, spoke at about the government’s commitment to helping the unemployed. During his speech, which lasted for 15 minutes, he also spoke about his government’s commitment to the ‘Alliance of Civilizations’ and quoted a passage from the bible. In addition he called for solidarity with the victims of the earthquake in Haiti and championed freedom and tolerance.

The Foundation consists mostly of representatives of America’s political class. This year the US president, Barack Obama, invited Zapatero to speak at the ‘National Prayer Breakfast’ at which around 3,500 people were present.

Zapatero was unable to speak to Obama before the meeting due to the US president’s delayed arrival but Obama did greet the Spanish president warmly and sat just two seats away from him. During Obama’s speech to the foundation he referred to Zapatero as his ‘dear friend’ and recognised Spain’s contribution to helping US forces in various missions around the world. At the end of the meeting Obama exchanged a few words with Zapatero. According to a spokesperson for the White House he expressed his desire to carry on developing good relations between Spain and the US.

Zapatero began his speech to the foundation by thanking those present for allowing him to speak in Spanish. He also highlighted the ‘admirable conquests’ on the subject of advances in freedom and plurality in the US. He said that ‘both our countries owe much to those who come from other countries without whom we would not be who we are’. He also called for solidarity with those who were unable to come as well as the victims of the earthquake in Haiti.

The Spanish president also insisted that the most pressing issue for governments was ‘creating employment’. But he also said that these jobs should guarantee the rights of workers. To illustrate his point he read chapter 24 from the book of Deuteronomy. "Do not exploit the poor needy labourer as he is one of your fellow men or a foreigner that lives in one of the cities in your country. Pay the labourer before the sun sets because he is needed and your life depends on his day’s work"
Zapatero also spoke of the Rights of each person to ‘moral autonomy’ and ‘to live with a person they loved’ which he also linked to the issue of freedom and tolerance. He said that ‘it is freedom which makes us people and citizens and which allows us to look to the future and know the truth’. He also said that hate bred ignorance and intolerance.

Tropical storms in the Canary Islands

The extreme weather conditions on the Canary Islands damaged hundreds of buildings and also resulted in many people being left without electricity or running water for hours yesterday. Tenerife is the worst affected island with the metropolitan areas La Laguna and Santa Cruz suffering the worst damage.

In Anaga, up to 270 litres of rainfall per square metre were registered in some areas and around 200 people were cut off due to the weather conditions.

On the island of Tenerife, 41 people had to be evacuated from their homes for their own safety in the areas of Tabaiba, El Rosario, the Valle Brosque (Tahodio) and in Camino La Ermita, in Santa Cruz de Tenerife.

Yesterday the town hall of La Laguna declared a state of emergency for the whole municipality. The worst affected areas were La Cuesta, Valle Jiménez, Valle Tabares and San Luis Gonzaga.

Thousands of homes and businesses were affected by the power cut and according to Endesa yesterday morning there were 11,000 people without electricity. Although this figure was down to just 3,887 by yesterday afternoon, most of whom were in Tenerife. By 9.30pm yesterday just 600 people remained without electricity in Anaga.

In addition to power cuts there was extensive damage to infrastructure in Puerto de la Restinga (El Hierro) and some people in La Bombilla and El Remo, located in the municipality of Los Llanos de Aridane (La Palma) had to be evacuated.

Mobile telephone connections were also affected with 48% of people in La Gomera unable to use their mobiles, 7% in Tenerife, 7% in La Palma and 22% on the island of El Hierro.

Most roads were operating normally without news of any major incidents except for eight roads in Tenerife, five in La Palma, six in El Hierro and two in Gran Canaria.

Schools which had closed due to the bad weather are due to open today except for eight in Anaga on the island of Tenerife.

As from today residents or groups of neighbours whose homes have been damaged or who have lost belongings as a result of the extreme weather will be able to apply for aid, as established by the Home Office, from their local town halls or local government offices.

In addition to this aid the President of the Canary Islands, Paulino Rivero, said that the regional government would also take special measures to help those affected by the weather with aid covering up to 50% of the cost of repairs. In a press conference yesterday he also said that things were getting back to normal throughout the Canary Islands.

Unemployment in Spain rises above 4 million

According to figures published by the Ministry of Work and Immigration unemployment in Spain rose by 124,890 in January which is a rise of 3.1% compared to figures for December 2009. At the end of last month the official figure for the number of unemployed in Spain was 4,048,493 which is the highest figure since records began in 1996.

Although the rise in unemployment last month was less than in January 2008 when unemployment rose by 198,838, the biggest rise on record, it is the sixth consecutive rise in unemployment. Over the last twelve months unemployment has risen by 720,692 which is an overall rise of 21.6%. Out of this figure 23.1% 386,972 are men (23.1%) and 333,720 are women (20.2%).

The Secretary for Employment, Maravillas Rojo, said that January is always a ‘bad month’ for employment given that unemployment always goes up ‘even in times of economic growth’. Rojo admitted that the new figures were ‘very negative’ but that the rise in unemployment was slowing down compared to a year ago. Nevertheless, Rojo also recognised that the number of unemployed had not reached its peak yet.

Out of the total rise in the unemployed in January 77,219 were men (+4%) and 47,671 were women (+2.3%).

Unemployment rose by 102,130 in the service sector (+4,5%) which accounts for almost 82% of the total. The second highest rise in unemployment was in the industrial sector with a rise of 8,873 (+1.7%). Unemployment in the construction sector rose by 7,036 (+0.9%). There were 6,285 more unemployed with no previous employment history (+2.2%) and 566 more unemployed in the agricultural sector (+0.5%).

A total of 1,050,233 new contracts were signed in January which is 6.7% less than January 2009. Out of this total 9% were permanent contracts (94,595)

The Secretary for Employment said that she was conscious of the fact that the current situation demanded new measures and that the government would be publishing its proposals for reforming the labour market on Friday this week.