Mariano Rajoy took over as Spain’s prime minister, backed by the strongest majority in three decades, and prepared to appoint a finance minister who will be tasked with reordering public finances and creating jobs.
Rajoy, 56, swore his oath before King Juan Carlos in Madrid before heading to the Moncloa Palace to take over from Prime Minister Jose Luis Rodriguez Zapatero. Rajoy, whose People’s Party won 185 of the 350 seats in Parliament, will name his ministers at a news conference at 7:30 p.m. in Madrid.
Rajoy is under pressure from investors, the European Commission and rating companies to say how he will revive a stagnant economy, reduce the 23 percent unemployment rate and prevent Spain from being overwhelmed by the sovereign debt crisis. While he has promised to “reshape” the public sector, he still hasn’t said how he will cut the euro region’s third-largest budget deficit while keeping the pledge he reiterated this week to raise pensions.
“If we don’t have something amazing by Jan. 5 we should start to worry,” Gayle Allard, an economics professor at IE business school in Madrid, said in an interview. “He’s been very cryptic, discreet.”
Rajoy has been waiting to take over since Nov. 20, when he defeated the outgoing Socialists in the national election and secured the largest majority any Spanish party has won since 1982. Spanish law didn’t allow Parliament to reconvene until last week, and the inaugural confidence vote was held yesterday. He holds Cabinet meetings on Dec. 23 and Dec. 30, and has told unions and employers to present him with proposals for a labor-market overhaul around Jan. 6, which is a holiday in Spain.
As Spain, along with Italy, has become the focus of the euro region’s debt crisis, the European Commission said yesterday it was expecting “details and the announcement of concrete measures in the coming days and weeks.”
In his inaugural speech on Dec. 19, Rajoy’s only detailed spending pledge was to raise pensions on Dec. 30. He said every other part of the budget could be reduced, and he plans to announce emergency spending cuts on the same day.
The new government will need to balance cuts with the risk of tipping Spain back into recession. The economy stagnated in the third quarter, and the Bank of Spain estimates it will contract in the last three months of the year.
Spain’s 10-year borrowing costs, which rose to a euro-era record of 6.78 percent on Nov. 17, eased to the lowest in two months yesterday, at 5.06 percent, after the European Central Bank extended its liquidity measures for banks. The yield was 5.27 percent today, 333 basis points more than equivalent German securities.