Beginning of the end for Spain’s crisis, says economy minister

Football aside, Spaniards have not had much to cheer about in the past few years

In an interview with the Associated Press this week, Spain’s Economy Minister Luis de Guindos said that Spain was approaching “the beginning of the end of the crisis,” adding that while there is still plenty of hard work ahead, the most difficult days are behind Spain.

The minister also remarked that Spain will need to boost growth significantly if the country is to once again possess the economic clout to be able to “make a real impact” on the European Union. To do so, de Guindos believes, Spain must move mountains to reduce its levels of youth unemployment – still the highest in Europe…

“Next year we are going to see an important reduction in the unemployment rate,” affirmed de Guindos, who at the end of this month is set to preside over third-quarter GDP data that is widely expected to show positive results after eight consecutive quarters of contraction, and nearly four years of uninterrupted recession.

“In Spain, we have a horrible employment situation. The unemployment rate is totally unacceptable,” added de Guindos, who said that recovery will be slow, there are no quick fixes, but steady improvement is more acceptable than none at all.

“Growth has to be enhanced in order to make a real impact on the employment dynamics of the labour market in Spain. The government is fully convinced additional measures have to be taken.”

Echoing the bullish predictions of Prime Minister Mariano Rajoy, de Guindos stated that Spain was “perfectly on track” to meet the 6.5 per cent GDP budget deficit, with the projected target of 5.8 per cent likely to be met, thanks in part to radical reforms of Spain’s labour market and laws.

Such harsh medicine proved unpopular earlier in the year, but because of the tax hikes, austerity measures and reform of some of Spain’s more cherished national institutions (cuts in health care and education were not well received), the country is “highly unlikely” to require any additional EU bailout.

“We rule out any further spending cuts because we are on track to meet the deficit,” de Guindos assured reporters. Last week, the International Monetary Fund (IMF) said that Spain could now afford to relax its chief austerity measures because earlier deep cuts in spending had had the required effect.

Looking to the near future, de Guindos was upbeat. “There is a rebalancing of competitiveness in the eurozone. The southern European peripheral countries have started to gain competitiveness vis-à-vis the central or core countries of the eurozone.”