May 22, 2013
Spain's Rajoy says no relaxation on reforming economy
Spain's Prime Minister Mariano Rajoy said his government would not relax efforts to turn around the Spanish economy after keeping the country's public deficit for 2012 under 7 percent of Gross Domestic Product.
In his first state-of-the-nation speech since taking office in December 2011 Rajoy said he would keep focusing this year on creating jobs, cleaning up the financial system and reforming the health, education and energy sectors.
"The first objective of this government is to turn around this situation... The reality is terribly hard, no green shoots or passing clouds or early spring," Rajoy said.
"To those who are asking for relaxation, not a minute of relaxation or calmness. This has just started. The road to creating jobs is a long one," he added.
Spain's economy is expected to shrink this year for a second year in a row.
Rajoy said that thanks to unprecedented spending cuts and tax hikes Spain had managed to reduce its public funding gap by more than 21 billion euros (18.34 billion pounds) in 2012.
The country would however still miss its European Union-agreed deficit target of 6.3 percent of GDP last year.
Although borrowing costs for Europe's fourth-largest economy and the likelihood of a sovereign bail-out for Spain is receding since the European Central Bank said it would act as a backstop to bets against the euro, analysts believe Spain will also miss its deficit goal of 4.5 percent of GDP in 2013.
The European commission will publish on Friday updated economic forecasts for the European Union's 27 economies.
It has said some countries could be given some flexibility in their deficit-cutting efforts in return for a strong commitment on structural economic reforms. Spain is widely expected to be one of those countries.
Spain has already been given an extra year, until 2014, to meet Europe-agreed goals of a deficit of under 3 percent of gross domestic product.