- Government predicts sustained growth will create employment
- Nation set for June elections after coalition talks fail
Mariano Rajoy’s caretaker government pledged to bring Spain’s unemployment rate down by almost half by 2019 and appealed to Europe for more time to meet its deficit goals as it prepares for repeat elections in June.
A sustained burst of economic growth averaging 2.5 percent a year over the next four years will help create 1.8 million jobs and bring unemployment down to about 13 percent from 21 percent now, the economy ministry said in a statement detailing Spain’s economic forecasts to be presented to the European Union. Spain will need another year to meet its deficit goal agreed with Europe and sees promoting growth as the best way to control public finances, Budget Minister Cristobal Montoro said in a news conference in Madrid Friday.
Acting Prime Minister Rajoy wants to buff up his credentials for nurturing growth as Spain heads for new elections in June after corruption allegations helped cost his party its majority in a vote held in December. The economy grew more than forecast at the start of the year, expanding 0.8 percent in the first quarter to exceed the Bank of Spain’s 0.7 percent estimate, the National Statistics Institute said Friday.
Spain will need more time to bring down its budget shortfall below the 3 percent threshold requested by the European Commission, Montoro said. The government sees the deficit at 3.6 percent this year, compared to a previous target of 2.8 percent, before dropping to 2.9 percent in 2017 and 1.6 percent in 2019.
The nation risks a sanction by the European Union after missing its deficit target last year despite receiving multiple warnings from the European Commission and the Spanish budget watchdog. Since arriving in government at the end of 2011, Rajoy’s government has failed to meet EU-set targets, although the nation’s deficit has almost halved under his watch.
The Spanish deficit came in at 5.1 percent of gross domestic product in 2015, compared to a target of 4.2 percent, as the Rajoy administration deployed a series of tax cuts in an election year.
According to the government’s estimates, unemployment should fall to 18.7 percent this year, before sliding to 13 percent in 2019 . The economy will grow 2.7 percent this year, 2.4 percent next year and 2.5 percent in both 2018 and 2019, according to the government’s estimates.