Spain’s Budget ‘will take economy out of crisis’

28 Sep 12
The Spanish government has put forward a draft ‘crisis Budget’ for 2013 that it hopes will inspire confidence and return the country to economic growth.

By Vivienne Russell | 28 September 2012

The Spanish government has put forward a draft ‘crisis Budget’ for 2013 that it hopes will inspire confidence and return the country to economic growth.

If approved by the Spanish Parliament, the Budget, published yesterday following a six-hour Cabinet meeting, would freeze public sector wages for the third successive year and cut departmental spending by 8.9% to below €40bn.

Spain’s vice president Soraya Sáenz de Satamaria insisted the Budget was one for ‘emerging from the crisis’.

Ministers said cuts would not hit social security spending. They highlighted a 1% rise in pensions and an increase in student grants.

Cristóbal Montoro, minister for the Treasury and Public Administration Services, said: ‘We want to make it perfectly clear that the adjustment is not being applied to social expenditure. To say that parts of society are being left unprotected in Spain is to simply not recognise the most basic and fundamental figures contained in the Budget.’

Montoro added that the amount collected in revenue for 2012 would ‘far exceed’ earlier projections. For 2013, estimated tax revenue will increase by 3.8%. A new 20% tax on Lottery prizes of more than €2,500 is to be introduced, as are changes to capital gains tax. The tax deduction applied to the purchase of a primary property is to be withdrawn from the start of next year.

The government believes 2013 will be the last year of recession in Spain. Montoro added that it would also be the last year in which Spain’s unemployment rate, currently 24%, would rise.

Ministers also approved some key economic reforms for the next six months. The Economic Policy Strategy comprises 43 new laws to improve competitiveness, create jobs and make the public finances more transparent, open and sustainable.

The Budget announcement came in the wake of huge anti-austerity protests in Spain’s capital, Madrid.

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