SPAIN: Prime Minister Zapatero is optimistic that his country is on the right path to economic recovery
Record ID:
699540
SPAIN: Prime Minister Zapatero is optimistic that his country is on the right path to economic recovery
- Title: SPAIN: Prime Minister Zapatero is optimistic that his country is on the right path to economic recovery
- Date: 23rd February 2011
- Summary: MADRID, SPAIN (FEBRUARY 21, 2011) (REUTERS) SPANISH PRIME MINISTER, JOSE LUIS RODRIGUEZ ZAPATERO AT INTERVIEW WITH REUTERS TV (SOUNDBITE) (Spanish) SPANISH PRIME MINISTER, JOSE LUIS RODRIGUEZ ZAPATERO, SAYING: "I feel like I've been in a battle since October 2008, in a battle to maintain the sustainability, the solvency of Spain. We are winning the battle, but I still have my guard up because we have to implement all the reforms that have generated more confidence. We can reasonably say we are winning the battle!" ZAPATERO DURING INTERVIEW (SOUNDBITE) (Spanish) SPANISH PRIME MINISTER, JOSE LUIS RODRIGUEZ ZAPATERO, SAYING: "We have seen how sovereign debt tensions have gone in cycles and when there are problems with one country those tensions extend to other countries. For that reason we have to keep our guard up. We expect that the next meeting of the euro group leaders on March 11 will be the definitive factor for stability. But I do have the perception that in recent weeks and months Spain has won the confidence of the markets - with certainty and security." VARIOUS OF ZAPATERO AT INTERVIEW (SOUNDBITE) (Spanish) SPANISH PRIME MINISTER JOSE LUIS RODRIGUEZ ZAPATERO SAYING: "I am convinced that Portugal will be able to finance itself. It is true that it has at the moment a high cost of financing but Portugal's government has applied a wide programme of reforms to reduce the deficit and fiscal consolidation, they are applying important structural reforms. We all should make an effort to transmit confidence to Portugal. This meeting of the euro group leaders on March 11 should also be a meeting to back Portugal; for the European institutions to let the public know that Portugal is complying. Surely that will allow for a reduction of the tension that exists over that country's sovereign debt." ZAPATERO DURING INTERVIEW (SOUNDBITE) (Spanish) SPANISH PRIME MINISTER, JOSE LUIS RODRIGUEZ ZAPATERO, SAYING: "The biggest challenge that we have is to create jobs. We need to give enough confidence to businessmen so that they feel confident to hire more people because our expectations of production, economic stability and the financing cost for our companies are now at reasonable levels. This is the great battle that we have to win this year; to start creating jobs and it is the most difficult one, the most difficult one. ZAPATERO DURING INTERVIEW (SOUNDBITE) (Spanish) SPANISH PRIME MINISTER, JOSE LUIS RODRIGUEZ ZAPATERO, SAYING: "When you, as a head of a government and leader of a party like the Socialist Party, faces difficult situations in your country, the last thing you have to worry about is your own political career. When your country's career, the country's future are at risk, the last thing you should worry about is your own political career. Besides, this is a natural reaction. This isn't simply in your mind knowing the high level of responsibility that you have. My party, which has backed all the difficult reforms that we are currently pushing forward, is a party that since the democratic transition has shown a very high level of responsibility with Spain during the easy and difficult moments. The Socialist Party has been the party that has made all the big reforms in Spain. A great part of the economic reforms, a great part of the political reforms, a great part of our task of integration within Europe. We know how to go through the difficult moments because we know that the future depends on what we do today and we have never turned our back to the future." ZAPATERO DURING INTERVIEW
- Embargoed: 10th March 2011 12:00
- Keywords:
- Location: Spain, Spain
- Country: Spain
- Topics: Economic News,Domestic Politics
- Reuters ID: LVA1VNNBUF09BIYZTZUT8NF12LCF
- Story Text: Spanish Prime Minister Jose Luis Rodriguez Zapatero says his country is winning its financial battle.
Spain is winning the struggle to restore financial market confidence and is convinced Germany will back a stronger euro zone rescue fund despite Chancellor Angela Merkel's domestic troubles, Prime Minister Jose Luis Rodriguez Zapatero said.
"We are winning the battle, but I still have my guard up because we have to implement all the reforms that have generated more confidence," Zapatero told Reuters in an interview in Madrid.
Zapatero voiced his confidence that Merkel would back a strengthening of the European Financial Stability Facility at a March 11 euro zone summit despite political problems sharpened by her party's crushing loss in a state election in Hamburg on Sunday (February 20).
"We expect that the next meeting of the euro group leaders on March 11 will be the definitive factor for stability. But I do have the perception that in recent weeks and months Spain has won the confidence of the markets with certainty and security."
The single currency area's fourth biggest economy came under attack in bond markets after a real estate bubble burst, causing a recession and 20 percent unemployment, straining public finances and threatening its fragile savings banks.
Until recently, the fate of the euro appeared to hinge on whether Spain could avoid following Greece and Ireland into a bailout that would stretch Europe's rescue fund to the limits.
Critics said the soft-spoken premier, best known until then for legalising gay marriage and abortion, was in denial, saying he blamed the crisis on speculators bent on destroying the euro rather than addressing Spain's own structural problems.
But since May, his minority Socialist government has cut spending, imposed unpopular public sector pay cuts, reformed labour law, clinched union backing to raise the retirement age to 67 and forced savings banks to merge and raise new funds.
"I feel like I have been in battle since October 2008," Zapatero said.
"The biggest challenge that we have is to create jobs. We need to give enough confidence to businessmen so that they feel confident to hire more people because our expectations of production, economic stability and the financing cost for our companies are now on reasonable levels. This is the great battle that we have to win this year; to start creating jobs and it is the most difficult one, the most difficult one," he added.
Pressure mounted on Spain after European partners and the International Monetary Fund (IMF) rescued Greece from the brink of bankruptcy in May. A second wave of bond selling erupted when Ireland was forced to seek an international bailout in December.
Zapatero responded to the Irish collapse by accelerating reforms. He announced the sale of stakes in the state lottery and airport operator, and coaxed trade unions and employers into signing a landmark social pact on pension reform and employment incentives.
Asked about neighbouring Portugal's chances in receiving a bailout, Zapatero said that the Portuguese government deserved confidence.
"I am convinced that Portugal will be able to finance itself. It is true that it has a the moment a high cost of financing but Portugal's government has applied a wide programme of reforms to reduce the deficit an fiscal consolidation, they are applying important structural reforms. We all should make an effort to transmit confidence to Portugal," he said.
Zapatero is now working to make collective bargaining rules more flexible by mid-March, organising negotiations by company rather than sector and linking pay to productivity, not just inflation.
His approval rating has sunk and his party trails the conservative opposition Popular Party by more than 10 points in opinion polls, prompting some analysts to say he is on a suicide mission that will end in certain defeat in 2012.
But Zapatero said any prime minister would have done the same to save his country. The 50-year-old lawyer, in office since 2004, declined to say whether he would seek a third term next year or step aside for a more popular Socialist candidate.
"When you, as a head of a government and leader of a party like the Socialist Parry, face difficult situations in your country, the last thing you have to worry about is your own political career," he said.
The prime minister said Madrid was willing to give binding legal force to long-term deficit reduction policies but Spain's rigid constitution made it impractical to pass a German-style "debt brake" amendment as Merkel has sought.
He said he would take further steps to ensure that Spain's autonomous regions stuck to their spending limits. Spain will have achieved its goal of cutting the deficit to 9.3 percent of gross domestic product in 2010 when final figures are published in the next two weeks, Zapatero said, and it would meet its commitment to slash it to 6 percent this year.
Spain's cost of borrowing soared in November and December in the run-up to the Irish rescue. Madrid had to pay 3 percentage points more on bonds than Germany, but that has fallen to 2 percentage points, still far above the 0.7 percentage point spread before the crisis began. - Copyright Holder: REUTERS
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