Spanish PM vows sweeping reforms to boost economy

With Spain facing its worst recession in decades, the government will approve this week a sweeping package of reforms aimed at changing the nation’s economic growth model, Prime Minister Jose Luis Rodriguez Zapatero said yesterday.

The reforms will touch on all areas of the economy from labour laws to the education system so that “Spain once again grows strongly and in a more sustained way,” he told a gathering of his Socialist Party in Madrid.

The prime minister said the reforms would include a focus on renewable energy, high quality education and a more modern public administration but he provided no concrete details.

The Spanish economy contracted 0.3 percent in the third quarter, its fifth straight quarterly decline, contrasting with a return to growth in the entire Eurozone of 0.4 percent during the same period.

Europe’s fifth-biggest economy has proved especially vulnerable to the global credit crunch because growth relied heavily on credit-fuelled domestic demand and a property boom boosted by easy access to loans.

Spain’s unemployment rate has doubled over the past two years to hit nearly 18 percent, the highest level in Europe, with construction workers leading the job losses.

The country of just over 46 million people accounts for roughly half of the rise in the number of jobless in the 16 countries sharing the euro currency over the last year, according to the European Union’s statistics office Eurostat.

Earlier this month, the head of the Bank of Spain, Miguel Angel Fernandez Ordonez, warned that the country’s growth model was “unsustainable” as it was excessively based on construction.

He also called for reforms in the labour market, without which he warned Spain faced a long period of high unemployment.

Spain accounts for just three percent of “high-quality” European exports, compared with 12 percent for France or almost a third for Germany, according to the Paris-based CEPII institute.

Source: AFP / www.expatica.com