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09 December 2015

Rajoy promises there will be no more cuts but EU Commission calls for further reforms

Brussels is due to release an assessment of Spain’s economy urging more cuts and further job market reform. This was one of the issues discussed in the first TV debate in Spanish history with all main contenders. The Spanish PM sent his ‘number two’ to the debate instead of going himself.

By Paula Martín Camargo, Editor

Spanish PM Rajoy was the big absentee in the first TV electoral debate in Spanish democratic history that included all the leaders whose parties are currently in the race for the presidency. Less than two weeks ahead of the General Election, Pedro Sánchez (PSOE), Albert Rivera (C’s – Ciudadanos) and Pablo Iglesias (Podemos), along with deputy PM Soraya Sáenz de Santamaría (PP), debated in a UK-US style TV encounter over the economy, corruption, the EU’s outlook for the  Spanish economy, Catalonia and the possibility of a coalition to run the country. [...]

All four parties at odds in economics

There were important differences between all four on the most relevant issues – but economic policy was the one were an agreement seemed impossible to achieve. The most criticised proposal was that of the C’s single harmonised working contract, seen by the Socialists as a “free working contract” and a “hidden job market reform.” [...]

The opposition leaders criticised harshly the cuts in education and health systems carried  out by Rajoy’s government: Rivera said that “what the PP has done isn’t reforms but cuts”. Sáenz de Santamaría defended the PP’s measures and said “there won’t be more cuts”.

Brussels asks for more cuts and deepening the labour market reform

But as Commissioner Moscovici warned in October, Spain’s 2016 Draft Budget submitted to the EU Commission is at risk of non-compliance with the deficit targets set for the next year – new cuts may be needed. The Commission is due to release its assessment of the Spanish economic situation this week in a report already seen by El País newspaper, and its conclusions head in the opposite direction to the message delivered by PM deputy Soraya Sáenz de Santamaría. The EU calls for further spending cuts if the government elected on December 20th is to meet the agreed deficit reduction targets, and asks for deeper job market reform to reduce the duality between temporary workers and fixed contracts. It is also critical of the government measures to stimulate employment. [...]

Full article available for consultancy clients here

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