Friday

29th Mar 2024

Zapatero announces new spending measures

Spain's Socialist prime minister, Jose Luiz Rodriguez Zapatero, announced new spending measures in a state-of-the-nation address on Tuesday (12 May), aimed at boosting the country's ailing economy and keeping people in their jobs.

During the address, he also announced new measures to cut public spending and increase tax revenues as Spain, like many others EU member states, struggles to contain its burgeoning budget deficit.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Opposition parties said Mr Zapatero's plans had little chance of success (Photo: The Council of the European Union)

"These measures have a double objective: stop job losses and prepare for economic recovery with changes in our economic model," Mr Zapatero said during his speech to the Spanish parliament.

Opposition parties, hoping to make gains over the government in next month's European elections, dismissed the plans as wishful thinking.

New job saving measures include a proposal to lower the corporate tax rate by five per cent over the next three years for small businesses who maintain or increase the number of employees held on their books.

A new €2000 incentive scheme aims to boost the country's ailing automobile sector. The government says it will contribute €500 towards the purchase of a new car, calling on regional governments to match this figure and for industry to provide the remaining €1000.

Spain's vital tourism sector is to receive €600 million for modernisation projects as many penny-pinching British and Germany tourists look set to cancel this year's beach holiday in the sunny southern European country.

Until now, the country has been the world's top tourist destination after France, receiving around 60 million visitors per year, with the industry employing one in every seven Spanish workers.

Spain's national statistics office reported last month that the country's unemployment rate reached 17.4 per cent in March, the highest in the EU.

A chief reason for this is the large downturn in the previously booming construction sector that analysts say the government allowed to overheat.

In response to this, a new €20 billion public-private Fund for a Sustainable Economy is to be set up in order the shift dependence away from the construction sector and onto more value-added industries such as the creation of renewable energy.

Likewise, plans to scrap income tax reductions on house purchases for all but the lowest earners will also help to boost state coffers and prevent future inflation of the country's housing sector.

Despite the new stimulus projects, Mr Zapatero said public finances will not come under greater than anticipated strain this year, thanks to €1.5 billion in government spending cuts.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us