Business, Finance & Economics

New Spanish Prime Minister Mariano Rajoy: Outlook is “somber”

Incoming Spanish Prime Minister Mariano Rajoy today gave a preview of his plans to cut the budget deficit, clean up the banking sector and reform the labor market in Spain, the Wall Street Journal reported.

Spain currently has an unemployment rate of nearly 23 percent, and its overall debt was 706.34 billion euros ($919.6 billion), or 66 percent of GDP, at the end of September, The Associated Press reported.

Speaking to parliament two days before he is scheduled to be sworn in as Spain’s prime minister, Rajoy said his government will seek to reduce Spain’s budget deficit by 16.5 billion euros in 2012, and no areas, except for pensions, which will be raised in line with inflation, are safe from cuts, the Financial Times reported.

Predicting that the economy would shrink in the current quarter, Rajoy called the outlook “somber,” the Financial Times reported.

Spaniards, he said, “face a thankless task, like that endured by parents who struggle to feed a family of four with enough money for only two,” the Financial Times reported.

According to the AP:

The government is desperate to keep the economy from falling into another recession and to reassure international investors that the country can handle its high loans. That is key if Spain is to avoid the fate of Greece, Ireland and Portugal, which needed bailouts because investors feared they would default on their debts.

Rajoy said his overhaul would include reforms of Spain’s bureaucracy, regulators, energy industry and state-financed health and education systems, the Wall Street Journal reported.

He also announced that the government would move mid-week bank holidays to the nearest Monday to stop the practice of workers taking ultra-long weekends, the Financial Times reported.

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