Rajoy Says 2013 to Be ‘Very Tough,’ Leaves Door Open to Rescue

Spanish Prime Minister Mariano Rajoy said 2013 will be “very tough” amid the sixth year of an economic slump. He refused to exclude seeking a bailout for the euro area’s fourth-largest economy.

“We still have ahead of us a very tough year, especially the first half, and we have to persevere with reforms,” Rajoy told a press conference today called to mark his first year in office. As of today, Spain doesn’t plan to ask for aid, though the “very useful” instrument remains available, he said.

Rajoy told Spaniards to brace for a difficult year as unemployment exceeds 26 percent and the Bank of Spain estimates the economy contracted for a sixth quarter in the last three months of the year. Measures to overhaul the economy, including changes to pension rules, and budget discipline will remain the priorities next year, he said, even as the European Commission has eased pressure on the government to meet budget targets.

Rajoy declined to estimate where the deficit will end the year, compared with a target of 7.4 percent of gross domestic product that includes the costs of bailing out banks. The deficit was 9.4 percent of GDP last year. The EU isn’t seeking more cuts from Spain until 2014, by which time the recovery should be bolstering revenue, he said.

“A gigantic effort has been made,” Rajoy said. “Never has so much been asked of a country that’s in a recession and with the financing problems there are now.”

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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