Spain's PM says 'no need' for more austerity measures

10th September 2010, Comments 0 comments

Spain's prime minister said Friday the government planned no new austerity measures to rein in the massive public deficit as the economic situation "has improved."

"We do not plan any additional cuts," Jose Luis Rodriguez Zapatero said in a radio interview.

Zapatero's Socialist government in May passed a 15-billion-euro (19-billion-dollar) austerity plan aimed at shoring up Spain's public finances amid investor concerns it could follow Greece into a financial crisis.

That was on top of a 50-billion-euro package of spending cuts announced in January designed to progressively slash the public deficit to the eurozone limit of three percent of gross domestic product by 2013.

The prime minister warned in late July that the government may adopt more unpopular economic measures and that the budget for 2011 would be "more restrictive and austere."

But asked by Cadena Ser radio Friday whether any new measures were planned, he replied: "There will not be any need.

"The (economic) situation has improved" since earlier this year, he said. "Tensions in the Spanish debt market have subsided considerably."

He defended recent government plans to ease the belt-tightening measures, including reviving some suspended infrastructure projects, as "a response to an improvement" and stressed the government must "adapt to the circumstances."

"I hope that it (the economy) will continue to improve and that we will have greater scope to ease the cuts that we have made," he said.

Spain plunged into its worst recession in decades at the end of 2008 following the collapse of a decade-long property boom and only returned to tepid growth this year.

The crisis sparked market fears that Spain could suffer the same fate as Greece, which needed a bailout from the European Union.

The positive results of stress tests for Spanish banks in July helped restore some confidence.

The recession sent unemployment soaring to more than 20 percent.

Parliament on Thursday gave final approval to a sweeping overhaul of the labour market designed to slash the jobless rate and revive the economy, despite union plans for a general strike.

© 2010 AFP

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