Spain Plans to Spend $8.2 Billion to Boost Growth

Spanish Prime Minister Mariano Rajoy said he’ll set out a plan to boost economic growth, competitiveness and efficiency in Europe’s fifth-largest economy next week.

The growth program will deploy more than 6 billion euros ($8.2 billion) of spending and will be followed up with changes to the country’s employment rules before the government winds down its activity for the summer break in August, Rajoy said at a conference in Sitges, Spain today.

Spain’s economy gained momentum in the first quarter as household and government spending offset a decline in exports. The premier is counting on a recovery from a six-year slump to tackle the budget deficit amid a 25 percent jobless rate.

“Things have changed in a very significant way,” Rajoy said. There’s been a “radical change of trend.”

While rating companies have raised the Spanish sovereign’s debt rating, its public debt load has more than doubled since 2007 to close to 100 percent of gross domestic product.

The outlook for the monthly report on jobless claims in Spain is “favorable,” Rajoy said. The number of registered unemployed is set to drop by 112,500, according to a Bloomberg News survey of five economists. The country had 4.7 million people registered as jobless in April.

“We may see figures the like of which haven’t been seen for a long time,” Rajoy said.

Rajoy, whose four-year mandate is due to end in 2015, said he will also lower the main rate of corporate tax to 25 percent from 30 percent and introduce a tax break to encourage companies to bolster equity, reducing their leverage. The government will also extend subsidies for car purchases.

The government will publish a wide-ranging overhaul of the tax system next month, the premier said. Those changes won’t involve changing sales tax, which Rajoy was forced to raise in 2012 as he battled to control the government’s finances.

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