From drag to driver: Spain now one of Europe’s leaders, say Rajoy

The Spanish Prime Minister is confident that Spain is now a key part of Europe's future

In a rather bullish state of the nation address this week, Spain’s Prime Minister Mariano Rajoy spoke of how Spain is no longer a drag on Europe, and is now seen as a key driver in the continent’s economic future.

That message of positivity was delivered on the back of an encouraging set of figures released by the government that showed a better-than-expected one per cent rise in GDP forecast for 2014. Such an increase, although modest, would allow for sustained job creation in Spain for the first time in six years…

With unemployment in Spain running stubbornly at 26 per cent, Rajoy told Spanish parliament that job creation remained his number one priority, revealing that his government will soon implement 24 months of lower social security contributions in order to give companies the confidence and financial freedom to hire more workers and create more jobs.

Employers have long demanded the introduction of such measures, and the 24-month period could be extended if it proves to have the desired effect of lowering unemployment.

Another reform Rajoy pledged was the introduction of greater tax relief benefits for those on low wages – a dramatic about-turn on 18 months ago when the Prime Minister controversially raised taxes in an effort to cut Spain’s public deficit, which remains one of the highest in Europe.

Spain’s own forecast for 2014 echoes the outlook expected from the European Commission, which places the country’s growth this year somewhere between 0.7 and one per cent. With borrowing costs at record lows, exports booming and banks loosening lending criteria, the purse strings are slowly being unraveled right across Spain, prompting Rajoy to make his bold assertion that the country is now a beacon of hope for Europe’s other beleaguered nations.

There is still much work to be done until Spain is even invited into the front seat of the European vehicle, but at least the country is no longer being left by the roadside.