President of the Government. A very good afternoon to you all and many thanks for coming.
We've just held a meeting and had lunch, as you all know, with Mr. Van Rompuy, President of the European Council, during which time we discussed a few issues that I will summarise for you in a moment. Mr. Van Rompuy will then speak and we will take a few questions after that.
We basically spoke about the European Council that will take place on 30 January in Brussels, where two types of issue will be discussed: one related to the economic situation in the European Union and the other related to the measures that must be adopted in the future. We also spoke about the Treaty reform.
As regards the position on the first issue, we are glad to see that discussions are taking place not only about public deficit control and debt reduction, which we must obviously do, but also about growth and employment because, in order to improve the welfare and wealth of the public, to create jobs, it is not enough, although necessary, to control public deficit or reduce public deficit, which is a commitment from this country and my Government, as you know, but we also need to undertake structural reforms.
I explained the approach to be taken by our Government to the President of the Council. We are firmly committed to reducing the deficit and we have taken the first decisions, worth fifteen billion euros, at the Council of Ministers we held on 30 December. It is our intention to soon implement the Budgetary Stability Act, which will also affect the autonomous regions and, as is to be expected, the Central State Administration Services. The basic objective of this Act is to return to a situation of budgetary balance, something that will also involve a development of the Spanish Constitution, of the reform we approved by agreement between the Partido Popular and the Socialist Party a short time ago.
At the same time, we are demanding (we will do so today at the meeting to be held this afternoon by the Fiscal and Financial Policy Council) that the regions, the autonomous regions of Spain, comply, in the same way that the Central State Administration Services will comply, with the deficit targets established. I have thus reiterated our country's commitment to controlling its public deficit.
However, we also need to undertake reforms and, in this regard, we are working on and are committed to completing a reform of the labour market within the next few weeks. We are also going to implement a reorganisation and restructuring of our financial system.
In the future, we will also need to tackle an energy reform, the Entrepreneur Act… In short, I think that what we intend to do in Spain is fully in line with the approach to be presented by the President of the Council at the meeting on 30 January.
Secondly, we spoke about the Treaty reform. As you know, this is basically about two things. The first is the assumption by all Member States of the European Union of the principle of fiscal consolidation and budgetary balance. To a certain extent, this is a public deficit and public debt control war. This will have to be incorporated into the Constitutions of those countries that approve it. Spain has no problem with that because, as you are aware, we have already incorporated it into our Constitution and we are now working on legislation to further develop it.
Hence, I told the President of the Council that Spain will vote in favour, as did the former President of the Government, José Luís Rodríguez Zapatero, of the general principles of this proposal.
Another aspect of the Treaty reform will be the implementation of the new European Mechanism, which is intended to have a triple function: to help countries in difficulty; to provide loans for the recapitalisation of the financial sector; and to buy debt on the secondary markets. We will also support this Mechanism.
The idea put to me by the President of the Council is for it to be possible to sign this reform or this Treaty by March. Spain will support that, let there be no doubt about that.
So, that's basically what we talked about today. I reiterated that Spain is a serious country that will meet its obligations and, furthermore, I am in complete agreement with what is being proposed by the European Council with regard to achieving the final goal, which is to create jobs and for there to be economic growth in our country and throughout the European Union.
I would like to thank the President of the Council for his visit, for having come to Spain today. I believe the meeting has been highly satisfactory, at least I think it was and I hope you think so too.
I will now hand things over to Mr. Van Rompuy.
Mr. Van Rompuy. Ladies and gentlemen, good afternoon, buenas tardes. I am particularly glad to be here in Madrid today, with President Mariano Rajoy. This was our first meeting, a very useful one and a very pleasant one. From my side, it was also very agreeable.
We discussed the main issues on the European agenda, particularly with a view to the upcoming informal meeting of the European Council at the end of the month. President Rajoy also set out the many initiatives his government is carrying out. We are both convinced that restoring confidence in the Eurozone is key to bringing the whole of Europe back to the path of economic growth.
The Euro Area has taken decisive actions on all fronts to rise to the challenge posed by the crisis. These initiatives push forward the necessary fiscal consolidation and structural reforms in our Member States, address the fragilities of the banking sector, reinforce our financial backstops and strengthen our economic governance. The recent EU decisions, combined with the actions by the European Central Bank, have been instrumental in easing tensions in sovereign bond markets these days.
In this context, I should like to comment the important decisions taken by Spain when adopting, by an overwhelming majority, the so-called "Golden Rule" to keep future budget deficits to a strict limit. The consensus reached in Spain on this issue is an example of the determination of the Spanish democracy to act to solve the debt crisis.
It is now important to implement two recent decisions taken by the European Council in December: the Fiscal Compact Treaty and the Crisis Mechanism. We will agree on the new Fiscal Compact Treaty at the end of this month and we will sign it early March. And furthermore, our crisis mechanisms will be strengthened. The European Stability Mechanism will enter into force in July 2012, a year earlier than planned, and we will also reassess the adequacy of the European Financial Stability Facility and the European Stability Mechanism sizes at the European Council in March.
We are working with our international partners to increase the resources of the International Monetary Fund and Euro Area members have already announced a contribution of 150 billion euros.
Restoring financial stability is absolutely key. President Rajoy and I fully share the view that a reform agenda based on fiscal austerity alone is not enough. We need to focus also on economic growth and job creation. And I summarise this in one sentence: growth-friendly fiscal consolidation and job-friendly economic growth are what we need.
We must urgently put in place an anti-recession strategy, mobilising means and efforts at the Union level and at the Member States level. The single market is a key driver to Europe's economic growth. We should fully use its potential, across all sectors - products, services, energy, digital economy - and therefore deliver on the Commission proposals by the end of this year. And equally, we must avoid a credit crunch for our enterprises.
Recent measures from the European Central Bank on a long-term lending facility for the banks were and will be essential in this context. But we also need to mobilise all available EU financial resources in the most effective way to contribute to the proper financing of our economies.
We have to improve the environment in which small- and medium-sized enterprises operate, we also discussed this with the Prime Minister. They are backbone of Europe's, of Spain's, economy performance and a key provider of employment.
We also need to stimulate demand, restoring confidence in the Eurozone will strengthen consumer confidence, which is key to enhancing private consumption. And recent exchange rate developments for the Euro will help our competitive position and our exports.
Our foremost concern must be combating unemployment and creating jobs. And many of them are young, as is the case in Spain. At the European January Summit, we will focus our decisions on youth employment and life-long learning, and the recent "Youth Opportunities" initiative from the European Commission offers perspectives for skills, training and job placements. I am pleased that Spain will fast-track a reform of the labour market in a country where more than 22 per cent of the active labour force is unemployed. This is not only a necessity, it is an emergency. In general, I will propose that we ask each Member State to establish a job plan, a national job plan, which will be the subject of enhanced monitoring.
Mr. President, I welcome that the measures you announced are being rapidly and consistently transformed into reality. You explained to me a new package to promote growth and employment. Your determination and the strong popular mandate you enjoy bodes well for the success of this endeavour.
Mr. Prime Minister, we share the same agenda, in Madrid and in Brussels. Spain is acting in the right direction, is doing even more than acting in the right direction. The European Council at the end of the month will emphasise a two-pillar approach: fiscal consolidation on the one hand, and a positive agenda on growth and jobs on the other hand. I repeat, the clue of our strategy is growth-friendly fiscal consolidation and job-friendly economic growth.
Thank you. Gracias.
Q. For Mr. Van Rompuy. Bearing the current circumstance in mind, with the recent downgrade by Standard & Poor's of debt in various countries, could you get ahead of the debate and even take the decision to raise the 500 billion euro resource ceiling for the SM and the FSF at the next Summit rather than do so in March as was originally the plan? Could it be said now that the new SM will enable loans to be given to the banks directly?
For the President of the Government, I would like to ask, bearing in mind that you will meet with the German Chancellor, Angel Merkel, next week, whether it can be expected that a labour reform will be approved this very week at the Council of Ministers meeting on Friday and that you will go to that meeting with the labour reform already under your arm?
Mr. Van Rompuy. Firstly, with regard to the Financial Stability Facility, I take note and I will of course examine the consequences of the decision announced by Standard & Poor's to downgrade the credit rating of the European Financial Stability Facility. Let's not forget that the EFSF continues to be assigned the best possible credit rating by Moody's and by Fitch, underlining its solidity. Neither agency has indicated any rating action for the EFSF in the immediate future.
Standard & Poor's decision - so-called decision - the EFSF's lending capacity of 440 billion. The EFSF has sufficient means to fulfil its commitment under the current and potential future adjustment programmes and will continue to be backed by unconditional and irrevocable guarantees from Euro Area members.
Heads of State and Government decided on 9 December to advance the introduction of the Permanent Mechanism, the ESM, to July 2012. The ESM will have its own capital, its own capital base, and thus be less affected by ratings of Euro Area Member States.
And then I will repeat what I said in my introduction: the adequacy of the overall lending ceiling of the EFSF and ESM of 500 billion will be reassessed by 22 March in a couple of weeks.
President of the Government. The specific question is whether the Council of Ministers on Friday will examine the Draft Bill of the labour market reform. That has not been planned for this Friday.
What has been planned is that, within the next two, three or four weeks, we will examine the Budgetary Stability Act, which we will begin to discuss with the autonomous regions today at the Fiscal and Financial Policy Council and which has a clear objective, for us all to make a joint effort, an effort that must come from all institutions because, logically, the deficit is a Spanish deficit, not the deficit of one autonomous region in particular. Therefore, that Law should be approved by the Council of Ministers between the end of January, the Council on the 27th, and the first two in February, as well as the financial system restructuring plan and the labour reform plan.
Now, in principle, there are no plans for any of them to be approved on Friday, but it is not beyond reason to think that some of them might be ready to be presented to the Council of Ministers on 27 January, or between 27 January and the first two Council of Ministers meetings in February.
I insist, these are a major part of certain instruments, the most urgent ones in my opinion, to work towards what is the great objective: that great objective of economic growth and job creation. All the others are instruments: one of them is the deficit reduction, not spending beyond our means, and another of them is the labour market reform. In Spain, the adjustment has already been made in terms of employment. In other words, there has been an adjustment in terms of jobs. That was how the adjustment happened in our country and there are many people who lost their jobs in the last four years. Hence the need for a reform of labour legislation. We cannot live in a country where 22 per cent of the population, or 45 per cent of our young people who want to work cannot do so.
Finally, a restructuring of the financial system is urgent because the recovery of credit is something essential to economic recovery.
I insist, I calculate that at the end of this month and in the first two weeks of February, we will have proposed our ideas on the matters to which you refer.
Q. I wanted to put my question to both presidents. There was some good news on the debt market today, but the truth is that the economic data in Spain, and in Europe, above all regarding employment, continue to be bad. There is much debate surrounding the austerity policies, especially whether or not they work. In Spain, you are talking about an adjustment and Mr. Rajoy quantified it at forty billion euros. Are you not concerned that that adjustment could increase the recession in Spain if those adjustment policies are failing? What would you say to all those who is asking about that?
On another Spanish issue, but I would also be interested to hear Mr. Van Rompuy's opinion. The situation in the autonomous regions of Spain is cause for great concern. I would ask Mr. Rajoy, the President of the Government, whether you are going to guarantee the debts held by the autonomous regions? How are you going to resolve that pressing problem that the regions have and whether Europe is concerned at all by the situation of the autonomous regions in Spain?
President of the Government. The first issue is, of course, the great debate. It's obvious - Standard & Poor's highlighted it a few days ago when it downgraded the rating of several countries in the European Union; they said this - that the public deficit reduction policies, the tough adjustment policies, could generate minor economic growth to begin with, that is true. But, despite that, probably, it is absolutely necessary to continue with those policies.
But, as the President of the Council said in his speech, as well as talking about that, we have to talk about structural reforms and also ensure that there is liquidity for those who meet the public deficit requirements and undertake structural reforms.
For that reason, for there to be economic growth in Spain, there will have to be a labour reform, a reform of the financial system, there will have to be an Entrepreneur Act and there will have to be a reform of the energy policy, which is a decisive factor for competitiveness, and all that will have to be done at the same time.
Furthermore, something that is very important and I'm glad to hear Mr. Van Rompuy say it, there must be liquidity instruments for those countries that meet their deficit commitments and reforms.
We already know that reducing the public deficit and implementing reforms is tough, difficult, they don't take effect in five minutes or in ten. They take their time and, of course, we cannot have a situation in which, at a time like this, our economies are unable to finance themselves.
That is why I think it is necessary to do everything, it is necessary to find the middle ground, which is never easy in any walk of life, and that is why I say this: we must continue reducing the public deficit, especially in a year such as the coming year, a year that will be very complicated; but we must accompany that with structural reforms and maintain a level of liquidity without which it is very difficult for the economies to function.
Your second question was about the autonomous regions. The State deficit this year - which has not yet been closed definitively, as you know - stands at approximately 8 per cent, of which 5 or 5 point something corresponds to the Central State Administration Services. Approximately 2.3 or 2.4 per cent corresponds to the autonomous regions. Please do not take these figures as objective, important or firm data.
Therefore, the deficit is everyone's concern. It's true, the figures deviate from the planned targets more in the autonomous regions this year but the Social Security has also missed its target by 0.4 per cent and so have the Central State Administration Services.
So, for Spain to meet its deficit targets, every one of the various administration services must meet its target. There are two alternatives in that situation: one, that the Central State Administration Services solely and exclusively focus on their own data - in other words, we have reduced our deficit by nine billion, almost, at 30 December, corresponding to the General State Budget - and we forget about everyone else; or, on the other hand, that we also try to help others in a difficult situation.
For that reason, we are going to ask the autonomous regions to meet their deficit targets for 2012, that they set a ceiling on both expenditure and borrowing, and we are willing to come to their assistance if any of them have liquidity problems. But in that case, we would not impose those limits but rather they would have to be in exchange for a programme capable of guaranteeing compliance.
What would be the procedure? That is something we are talking about at the moment but I think that we all form part of the State and the Government of Spain cannot ignore those who meet their obligations and, at the end of the day, generate benefits not only for their region but also for every other inhabitant of the country.
So, that is our position and that is what I understand will be discussed at the Fiscal and Financial Policy Council. We will also discuss this at the Delegate Committee for Economic Affairs and probably at the next Council of Ministers, although we will not be definitively approving, as I said before to your colleague, the consolidated text of the Law.
But I insist, the Government cannot ignore what happens in the rest of the country. We all form part of the State, we all form part of Spain and we will go to Brussels to speak on behalf of every Spaniard and all its regional authorities.
Mr. Van Rompuy. I will be very brief. The fiscal targets put forward for a country are commitments for the country as a whole. How a country is organising itself to achieve those targets, that's their own problem. And I know that it's much more difficult in a federal state than in a centralised state, but we are checking at the end the final result from the country as a whole.
And I can say this with some credibility, coming from a federal country and having been a minister of a budget and a prime minister for quite a time. So what the European Union is asking for, is the implementation of an overall target. And it's up to Spain to organise itself, as I said, in order to achieve that target.
Of course, it is evident that all entities of the state have to participate in the effort but again, how this is organised is not my problem. We are finally evaluating the result, not the method.
President of the Government. Thank you very much and good afternoon.