Speech and subsequent Q&A session by President of the Government at closing event of 33rd Annual Meeting of Economic Forum

Sitges (Barcelona)

Ladies and gentlemen,

A very good day to you all. I would once again like to thank the Economic Forum for their invitation to attend and to its President, Juan José Bruguera, for his words of welcome. It is indeed the fourteenth occasion on which I have taken part in this Annual Meeting since 2004, when I was invited for the first time, in my then capacity as President of the People's Party.

At the time of my last speech here, on 28 May last year, Spanish politics were going through a tough time, as you will remember, and I announced to you then that it was my intention to come back here, if you were to invite me, and to do so in the same capacity as President of the Government. I have worked to that end, which is why I feel very honoured to take part once again in these meetings which I will continue to attend with great pleasure whenever you want.

These events, which are now traditional, that Sitges has been hosting for some years are an excellent exponent of the vitality of civil society. I believe that countries need sound and credible institutions that contribute to the quality of economic debate and, as it should be, to political debate, and, in this matter, the Economic Forum is an indisputable benchmark due to its track-record and its prestige. Clear evidence of that lies in the speeches that have been given here over these last few days, in which you have addressed some of the key factors for job creation and improving the competitiveness of our economy.

My speech here today will address the situation of the Spanish economy at this time and its outlook for the future. I will be brief and we can thus have more time for questions and answers.

In summary, the issues I wish to mention are the following: where we have come from, where we are today, where we are heading and what Spain must do to maintain the current rate of growth and job creation, and to improve our economy.

During the course of my speech, I will try and answer some of the concerns that the President of this Forum mentioned in his speech. There are some aspects that I was not planning to tackle in my opening speech, but which I will do so now. I will talk about the issue of Catalonia at the end; I will talk about Europe, I will talk about Brexit; I will talk about the Mediterranean Corridor and Barcelona's candidature to host the European Medicines Agency, all of which are issues that are undoubtedly important for public opinion as a whole. If there are any issues that I cannot respond to in my speech because I haven't been diligent enough in taking notes, then I will certainly be able to do so in the question time.

Having said that, I will start to develop the four points I mentioned a few moments ago.

First, where have we come from? Five years ago, on 2 June 2012, I took part in the forum in my role, for the first time, as President of the Government. Spain was then suffering from the consequences of an unprecedented crisis that tested us both as a nation and as a society, and which even endangered our welfare system.

In the modern economic history of Spain, our Gross Domestic Product has only shrunk on four specific occasions, very distant in time one from the other: in 1953, 1957, 1981 and 1993. Although these were severe years of crisis, our economy always bounced back quickly. In contrast, between 2009 and 2013 - 2009, 2010, 2011, 2012 and 2013 - Spanish GDP shrank each year, for five straight years, something that had never happened in the 60 previous years in our country. That led us to lose, which might sound easy to say, almost 10% of our GDP, of our national wealth, and more than 3.8 million net jobs were shed as from 2008, to reach the unprecedented figure of 6 million unemployed. This was undoubtedly the worst feature of the crisis.

This was all the result of many years of strong debt and the accumulation of economic imbalances of all kinds: public deficit, foreign trade deficit, inflation, a loss of competitiveness, etc. And on top of that, a significant part of the financial sector was in an impossible situation, to use a neutral expression, and which had ceased to perform its function of channelling credit to households and companies.

That was the period, as you will assuredly remember, of the bailout, of the soaring risk premium and of the threat, which is no mean thing, of the break-up of the Euro. I remember that in those first few months of my government, every time I appeared before the media, the first thing I was asked was, "when are you going to ask for a bailout?"

It would seem like a long time has passed since then, but it hasn't; only five years. But many things have happened in these five years: what we have had to do between us all to pull Spain out of this crisis and recover the path of sustained and balanced growth.

My government assumed, with responsibility and at a clear cost, as you all know, the task of pulling Spain out of the crisis. To achieve that, we implemented an unprecedented reform agenda and a comprehensive review of the economic policy adopted until then.

I am not going to go into detail on this economic policy, because you are perfectly aware of this and because this is all in the past; I will simply remind you that this policy had two main cornerstones: fiscal consolidation, as the President of the Forum just mentioned in his speech - which I believe he did very accurately - and structural reforms. This is exactly what I said that I was going to do in the speech I gave that I mentioned earlier on 2 June 2012 at this same forum.

We have now briefly seen "where we came from". Let's move on now to "where we are today".

The situation has been completely reversed; today Spain is growing, it is creating jobs and it has a more balanced and sustainable growth model, founded on exports - another issue that the President of the Forum mentioned in his speech - and on competitiveness. Our sound recovery has been acknowledged by such prestigious institutions as the OECD, the European Commission, the International Monetary Fund and the World Bank. I will just give you a few figures so as not to bore you.

After closing 2016 with growth of 3.2% of GDP, our country carved out three straight years of positive growth, following on from five years of negative growth. For yet another year, Spain grew again in 2016, well above, in fact almost double, the average of the Eurozone and also well above the other main economies in the Eurozone, such as Germany, which grew by 1.9% compared with our 3.2%; or France, with 1.2%, or Italy, with 0.9%. Something that was unthinkable just four years ago.

And in the first quarter of this year, of 2017, Spain continues to head up growth in Europe, with a figure of 0.8%, once again well above the Eurozone average of 0.5%. This, in annual terms, is almost double the growth of the Eurozone and once again well above other countries such as Germany, France and Italy. If we maintain this rhythm, the Spanish economy will surpass, during the first half of this year, the level of GDP prior to the crisis. Just look at where we are now.

Growth is translating into strong job creation. Spain heads up the job creation and reduction in unemployment figures in Europe, although it is true that we were the country with the highest level of unemployment. Over the last two years, the Spanish economy has generated 25% of all the jobs in the Eurozone and 40% of all youth employment, and, moreover, it has contributed to reducing 50% of the unemployment. Since the first quarter of 2014, Spanish society has created a little more than 1.5 million jobs, at a rate of half a million a year, and since the worst point of the crisis, the number of unemployed has fallen by almost 2 million.

In the first few months of this year, we have carved out positive results. The first Labour Force Survey (Spanish acronym: EPA) of the year shows that we now have more than 18 million people in work and that the number of people out of work has fallen by 536,000 in the last 12 months. It is worth pausing for a moment to look at the figures for April, which are exceptional; they truly are. The figures for National Insurance contributors are the best on record for the month of April, in terms of job creation, since the year 2001, and the number of NI contributors exceeds 18 million for the first time since 2009. Added to which April posted the largest reduction in unemployment on record since 1996.

Private companies are driving the job market the most, which is very important. The figures for the increase in National Insurance contributors show that companies in the industrial and services sectors are largely responsible for this buoyant job creation.

And in the foreign trade sector - this is a very positive figure - our dynamic export sector has resulted in a positive foreign trade balance over the last four years. This had never before been seen in Spain. This is an unprecedented event in our recent economic history, due to a substantial change in our growth model. The Spanish economy is now growing without the need to get into debt.

In 2017, the foreign trade sector continued contributing to growth. In March, the exports of goods - I am not talking about services - broke a new record, growing by 16.9%. In the first quarter of this year, our exports grew by 14.1% on the first quarter of last year.

Someday, someone should pay tribute to the business leaders that have exported because they have been decisive in recovering the economic situation in our country.

And what is it all down to? It is down to today having a much more competitive Spanish economy. Spain represents almost 2% of the world's exports, a share that has been on the rise each year for the last four years. We now export more than one third of our GDP, compared with the figure of one quarter which is what we exported before the crisis, and we are ahead of such competitors as Italy, France and the United Kingdom. From among the main economies, only Germany is ahead of us in terms of share of exports as a percentage of GDP.

This improvement in our competitiveness has also been acknowledged by international institutions. The World Bank, in its ranking of countries with the best business climate, places us on a par with Japan, France and Switzerland, and the same is true of the ranking drawn up each year in Davos.

We are also becoming more attractive for international investment. The foreign productive investment in Spain reached the figure of 23 billion euros in gross terms in 2016, thus consolidating the trend towards recovery that began in 2013.

In short, and I will now finish quoting figures, Spain is growing because it produces and because it exports - what I am about to say is also important - and all of this whilst maintaining high levels of social protection.

I don't want to overwhelm you with more figures but there is one that I believe is particularly significant. More than 14 million people receive some form of benefit or subsidy from the public authorities each month, and that does not include study grants. This number includes the almost 10 million people that receive some form of pension (retirement, orphanhood and widowhood), those that receive unemployment benefits and benefits for long-term care. And thanks to the efforts to maintain a high degree of social cohesion, it has been possible to move, without serious social conflict, from the worst points of the crisis to the current path of recovery.

This is a very important fact, because without this social support everything else would have been much more difficult. You know that there are many people who criticise everything, but it is important to know that it is very difficult to find a country outside of Europe with the level of social protection that exists in Spain.

Another fundamental element is access to credit, which is improving; companies are receiving financing at a lower cost and households now have greater access to more financing. The cost of issuing debt has gradually fallen, the risk premium has moderated to stand at similar levels to before the crisis and it is enough just to point to the close of March - I believe this is another significant figure - which saw the average cost of Central Government Debt at an all-time low of 2.67%, and short-term issues of State debt are being financed at negative interest rates, as we have seen in recent weeks.

These positive results have translated into the confidence of the economic agents. According to the latest Consumer Confidence Indicator for April, expectations regarding the economic situation have improved by 25.6% in the last year and, in terms of employment, expectations have improved by 23%, and the majority of citizens are of the opinion that the employment situation will be even better in six months.

And now, ladies and gentlemen, let's move on to what is really important.

This radical change has been possible thanks to the efforts of the Spanish people; thanks, above all, to the efforts, as I said earlier, of many business leaders, but also of many workers and of many people who, as you know, had to tighten their belts and, if you will allow me, modestly speaking, but I say this because it is true, thanks to a different economic policy, which was very tough to put into practice: fiscal consolidation and structural reforms. If we maintain this policy, it will be possible to continue making progress with our country at the head of Europe.

And I will now move on to the third part: where we came from, where we are now… Where are we heading? I will give you my opinion which, naturally, is very open to discussion.

We have raised the growth forecast for this year from 2.5% to 2.7%. Let's see how this pans out. Obviously, our forecast is for 2.7%. I should say that we have got this wrong each time, but we have got this wrong because we have set lower growth forecasts than the figures that finally came through, which doesn't mean that this is what is going to happen this year, in 2017, nor does it mean the opposite. This revision is on the rise with what was done by the International Monetary Fund, the European Commission and the Bank of Spain.

In the medium term, how do we see things?

• The economy will grow at an average rate of 2.5% from now until 2020; that it what we predict at this time.
• Economic growth will continue to be intensive in terms of job creation at an average rate of half a million new jobs a year: we will hit the figure of 20 million people in work by the end of the year 2019, the unemployment rate will fall to stand at 11.2% by the end of 2020 whereas, as you know, it was as high as 27%.
• The public deficit will stand below 3% in 2018 - it stood as high as 11% - and by 2020 Spain will be in a situation close to budgetary equilibrium.
• Fiscal consolidation will also allow us to reduce the public debt by several percentage points.
• The foreign trade sector will continue to provide a positive contribution. The balance of the current account will continue to post a surplus of close on 2% of GDP, at least, for another four years, to thus record eight straight years with a surplus in the current account.
• Consumption and investment will be the drivers of growth, particularly investment, above all in capital goods.
  That is how the Government of Spain sees things and these are the forecasts we have published and submitted to the European Union.

I will move on now to the fourth part of my speech: where we have come from, where we are now, where we are heading… And now, what do we need to do to ensure that these forecasts become a reality, to thus maintain the current rates of growth and job creation?

The first thing is to maintain, as the President of the Forum said in his speech, the commitment to fiscal consolidation and structural reforms along the lines of what has been done to date, and that must be done against the current institutional backdrop, which requires agreements to be reached with other political forces, agreements on the public accounts and to carry out reforms.

I will refer, firstly, to budget stability, which will continue to be an inescapable commitment. We have set fiscal targets that are in line with our commitments to the European Union, in particular this year's deficit target of 3.1% and 2.2% in 2018 when we exit the excessive deficit procedure.

Our budget strategy can be carried through, and the deficit target of 3.1% be met without resorting to taking additional measures. I believe that the agreement we reached in 2016 with other political forces, in particular with Ciudadanos, at a fiscal level, was very positive and I believe that this were seen in Europe as an exercise in responsibility.

The same is true of the Budget for 2017. We have 137 MPs, as you know, and we have reached certain agreements: firstly, and the most important agreement, with Ciudadanos, a party with 32 MPs; the second agreement was with the Canary Island Coalition and the third with the Basque Nationalist Party. This gave us 175 votes in favour regarding the global amendment, which failed because there were 175 votes against. With a 175-175 tie, the global amendment was not approved, but nor can the Budget be approved if there is a 175-175 tie, and hence we need 176. We are working on this, because it is our obligation to reach 176 votes so Spain can thus have a Budget.

I should state that if Spain has a Budget, this will be very positive, not so much, but rather also, for the fact of having a Budget, because we already have one in force, the one that was extended, but rather because of the message of stability, of seriousness and of a country that is able, in a difficult parliamentary situation, to reach an understanding.

Hence, we are going to try and achieve this and, in all honesty, since I have been in politics for many years, I have learnt what gives you votes and what doesn't and, in the medium term, what gives you votes, the same as what is beneficial in any walk of life, is being serious. Short-term plays precisely serve that purpose, for the short term, which, as you all know and as the word says, indicates that this is very short.

That is our first goal. Second, we must push on with the structural reforms and, in addition to continuing with the structural reforms, we must not undo what has already been done and proved to be useful. You change what does not work, but it is an error to change what works. I always insist on this matter because I believe that the Spanish economy has a lot at stake.

Aside from that, the reforms. These reforms were agreed with Ciudadanos, at least the majority of them, in our investiture agreement. I believe that these reforms can be approved to a great extent with the political forces that have backed us in the Budget, but then, we will need to continue looking for support and we will see how this can be done.

Measures aimed at creating jobs and for these to be more inclusive and of better quality:

• We are going to work towards improving active employment policies and training, with a special focus on young people and the long-term unemployed, as well as on digital training - I know that this was already spoken about here - vocational training and continuing to make progress on dual vocational training. We will also try to reach a Pact on Education.
• Second, measures in relation to the goods and services market to further improve the competitiveness of our economy and supply essential goods and services to our companies. I am referring to energy, infrastructures, the digital agenda and the financial sector. In his speech the President spoke to me about infrastructures: the Mediterranean Corridor is, has been and will continue to be a top priority for the Government of Spain; I repeat, one of the most important priorities in terms of infrastructures.
• Third, measures aimed at backing entrepreneurial initiatives and business development so that it costs less to start a business activity and it is easier to maintain and grow this. I am referring, for example, to the development of the Strategy to Eliminate Business Thresholds - this is one of the priorities of family businesses at this time in our country - and the Strategy to Internationalise the Spanish Economy 2017-2027.
• Finally, measures to foster the digitalisation of the economy, another important issue, and to continue modernising our public authorities, simplifying and improving hiring processes, digitalising even more our public services and improving the regulatory hiring and drafting processes, which are also important.

These reforms, as I have said, form part of the agreements reached with other political forces. We are also going to work, as we have been asked to here in the speech preceding mine, on innovation and research; we are going to try to efficiently use resources, particularly energy resources; we plan to present a bill in the fight against climate change - the day before yesterday, on Thursday, I inaugurated some workshops over a day and a half on the Climate Change Act and the energy transition - and on the digital transformation of our economy, which is also an important issue.

Ladies and gentlemen,

If you ask me about my vision for Spain and the situation, I would tell you that my outlook is positive and hence, I am optimistic. I believe that we have some wonderful foundations. The thing is that we have, or some people have, a certain tendency to only talk about what is not going well, and I would like to add something to that.

Spain is the 14th largest global economy, according to the International Monetary Fund, and the fourth largest in the Eurozone. We generate more than 10% of our GDP in the Eurozone and this gives us a certain weight on the international stage.

We are the 18th ranked exporter of goods and services in the world according to the World Trade Organisation. Today Spain is an economy, as I said to you before and you know this better than me, focused on the international market, which is a radical change and a promising reminder of our growth model. We are an important producer and exporter of capital goods and high technology consumption. Spain is the second largest manufacturer of automobiles in Europe, behind only Germany and the eighth in the world; that's not bad. In 2016, 2.8 million vehicles came out of Spanish factories, of which 85% were exported.

Since mid-2013, investment in capital goods in Spain has increased by 20%, compared with an average of 12% in the Eurozone as a whole.

Spain is the third leading tourist destination in the world, both by the number of visitors and by income, and it has the most competitive tourism sector in the world, according to the Davos Forum. 75 million people visited Spain last year. Catalonia is a region that receives million and millions of tourists, and Barcelona is a leading city in this respect.

We are the 11th exporter of services in the world. Spain is one of the countries with the best infrastructures, although we want more, because we want to improve. On the one hand, through physical infrastructures: we have more kilometres of high-speed railway than any other European country and the second largest network in the world, and we have wonderful roads, ports and airports. I would like to say the following in terms of digital infrastructures: Spain has the best digital networks in all of Europe and 4G coverage has gone from zero to 90% of the population in the last four years. And almost 23 million households have fibre optic, which is the highest figure in Europe.

At present, Spain is one of the most attractive destinations to invest in. International investors are committing to Spain, according to the latest reports we have available, we are in 11th position in the annual report on the 25 best countries to invest; we have gone up two positions on the 2016 rankings and six positions on 2015. And, furthermore, we are an important investor in the rest of the world, the second largest investor in Latin America and - just look at that figure - between 1980 and 2015 our accumulated investment overseas has risen fourfold.

Moreover we are a country that was on the verge of bankruptcy while now we are the country to enjoy the greatest growth in the Eurozone. I don't intend to make this an advert, above all at this point in my life because, furthermore, all these figures have not come about as a result of the actions of the government of the People's Party, nor in the years that we have been in government. These figures, despite the crisis, have taken place in the last few years, when Spain has experienced great progress. I repeat, they have taken place despite the crisis and they have taken place because of the courage and determination of many people who have been capable of generating well-being, wealth and employment.

Hence, in short, if we do things well, and given that we have sound foundations, things must go well for us in the future; I repeat; if we don't go wrong and don't make mistakes, if we manage to have a minimum degree of political stability, things will go well in the future.

I am going to respond to the question of Catalonia, which was not part of this speech but which I believe makes sense for me to do so and I will give you my opinion, with absolute sincerity. My opinion with absolute sincerity, because it doesn't make sense for me to do anything else.

It is one thing what one thinks and another thing what we have to do. I am going to tell you what I think. I feel Spanish and, given that it is very common to talk about one's feelings, within my range of feelings lies the Spain that we have today. We all have feelings and, sometimes, there are conflicting emotions. I feel Spanish. I am on the side of what the Constitution of 1978 says; I am on the side on national unity and national sovereignty. National sovereignty means that all the people of Spain are entitled to decide on the future of our country, which is not compartmentalised.

That is how things are and that is contained in all of the written Constitutions around the world, except the Soviet Union, when it existed, the former Yugoslavia, when it existed, and the Ethiopia we got to know. In other words, we have a Constitution in the same sense as all the countries in the world.

I believe that pro-independence claims in the times in which we live are the worst thing that can happen to all of us, to all the people of Catalonia and to all the people of Spain. This breaks up our centuries of history together, the one that we have gone through and the history of our predecessors. This breaks off the ties of all kinds that unite us; starting with affective ties and family ties. Here there are many children of Galicians and grand-children of Galicians who are proud to be from Galicia, they love Catalonia, where they have managed to carve out a life and they clearly feel Spanish. In the same way as I mention Galicia - I mention this because that is where I am from - I could mention many other places in Spain.

We are going to stop sharing everything we share. We are going to force the people of Catalonia, who are Catalans, Spanish and European, to choose one of these three statuses. They will leave Europe, whatever they say.

You spoke about Brexit in your speech. The British people were told that Brexit was great news, that they needed to leave, that it was no big deal, and then, some of the people who were saying this remarked that everything had been exaggerated in the election campaign and that they had been lied to, as I am sure you will all remember. Well, Brexit will have consequences and, unfortunately, these will be bad, firstly for the British people, but this will also harm the rest of Europe, and remember that Brexit took place through an absolutely legal procedure.

I think this because there is no reason to it, because it goes against the way of the world. And we are not talking about fiscal harmonisation here, in Europe. We could also undertake fiscal harmonisation in Spain, but then some people would complain that the Succession Tax is one way here, and another way there, etc. But that is what we have chosen to decide, that is our autonomous status, and hence, everyone exercises this how they deem fit and opportune. This debate, which is very important, was raised at the Conference of Regional Presidents we held in the Upper House back in January and there were people who opted in favour of this and others who opted against. What you can't say to those who, in the exercise of their autonomy, wipe out the Succession Tax, is that " you have to put it because otherwise it prejudices me".

Hence, this would be traumatic and the economic consequences would be terrible. I believe that the Minister for Economic Affairs said here that Catalonia would lose 30% of its GDP. That's probably true. It would obviously lose all its European aid and it would lose the chance to host the European Medicines Agency, although there are already some people spreading rumours about this, not here fortunately, but outside of our country.

That is my opinion, an opinion that coincides with that of some but not of others. What we must do is try and find an effective solution, another formula. I agree with these statements, I am absolutely in agreement, and I have been trying to say this for a long time.

I will now explain how I see things. I am asked to do something that I cannot, nor wish to, do. You can say, who are you to say what you want to do? I don't want to do it. In other words, I don't want a referendum to be held in any part of Spain that deprives the Spanish people of their right to decide on what their country is; not here or anywhere else in Spain. I don't want to do this, nor do I believe in it, and while I am President of the Government this is not going to happen. You can be totally and absolutely sure of that.

You might say that I don't want to do that. But I can't do that. It is not just that I don't want to, but that I can't. I can't authorise this referendum. This referendum could only be authorised by Parliament, by our 350 MPs; but in that case, moreover, we would need our Constitution to be changed, because national sovereignty lies in the people of Spain and the Constitution says, like all written constitutions in the world, with the exception of the three I mentioned earlier, that sovereignty lies with the Spanish people, as we have seen in the ruling handed down by the court in Baviera and some other Italian courts.

The right to self-determination does not exist and the right to decide belongs to everyone to say what they want their country to be.

This has been proposed to me and I am not given any room to manoeuvre because I am told to negotiate this referendum, but this referendum cannot be negotiated. So I can negotiate whether this takes place on one date or another; I can negotiate whether you need 50%, 40% or 60% for it to take effect. I am allowed to talk about this, but the referendum, which I cannot authorise, and they know this, cannot be negotiated.

Moreover, if I don't accept this, I will be presented with a law, which is called the Transience Act, which we have seen published this week in one of the national media. And, moreover, this law is intended to be approved in just one day - and here we have some members of the Regional Parliament of Catalonia - in just one day, because the Regulation of the House has been reformed so that this minor issue that is the Transience Act can be approved in one day, which means that in one day someone wants, by a majority, to do away with the Spanish Constitution, to do away with the Statute of Autonomy of Catalonia, to do away with national unity, to do away with national sovereignty and to take Catalonia out of Europe. And all of that in just one day.

Ladies and gentlemen,

However surprising and paradoxical this may seem, that is exactly the way it is. Do you believe, in all honesty, that this is normal? What level of radicalism are we going to reach? How can you leave such decisions that are so important for so many people in the hands of extremists like the CUP? Does that seem sensible and reasonable to you?

I will do everything that is in my hands, everything, so that common sense prevails. Now, I have also heard here that this requires a political solution. Yes. But, when it is a question of our country, a political solution yes, but this is not just a question, as some try to say, of the President of the Government; it is an issue that has a little do with the President of the Government, but it is rather a question that has to do with the government, it is of course a question of MPs and, of course, it is a question of all those people who believe in their country, and not just a question of politicians. And I remember what happened with Brexit, which was legal; it is no big deal and yet we are talking about the rights of the British people in the rest of Europe, about the rights of the Spanish people in the United Kingdom, of how much money the United Kingdom must pay to leave, about whether the EBA or the Medicines Agency must leave, etc.

When proposals like this are made, it would be appropriate to know exactly what the consequences are.

The issue of Europe. From an economic point of view, I will just make two or three points. The economy of Europe will go well. The President of the ECB, Mr Draghi, appeared before the European Council in December and announced three years of economic growth in all the countries of the European Union; three straight years, at least, of economic growth.

There are two very positive figures that have just been announced, which is the victory in France of a party that defends European positions and also in Holland. The negative fact is undoubtedly Brexit. But there are two issues that I would like to mention, because they affect the future, and some of these were mentioned by the President of the Forum in his speech.

Europe must do two things, which is what we have agreed: first, concern itself more with all the real problems of people and be more effective, and second, set a horizon, say where we are heading in terms of the integration process.

As regards the first issue, the priorities at this time of the people of Europe are firstly, the issue of refugees and economic immigration; second, the fight against terrorism, and third, the well-being of people: growth, employment, maintaining the Welfare State, etc. Those are going to be the priorities, because they are the priorities of our citizens as a whole.

Second, as regards integration, we are going to make an effort to further integrate our defence policy, our security policy and our foreign policy, and on economic policy we must complete the Banking Union, above all the European Deposit Guarantee Fund, and then we have the issue of Fiscal Union.

In my opinion - this is mine, of course, but not that of many people - I believe that Europe must move towards a genuine European Budget - what we have at present is not a genuine European Budget - with a figure similar to a European Minister for the Treasury and with Eurobonds, in other words, a Treasury. The thing is that this is not easy to reach. My argument is that, of course, some people may be prejudiced by their bonds being mixed with others.

So, in the same way as when we joined the Euro countries were required to have certain levels of inflation, of public deficit and the suchlike, here we must also require countries that want to join to have certain standards of competitiveness so that they don't prejudice the bonds of some people and of others. And I also agree with what the President of the Forum said in his speech, which I have jotted down here: this is not obligatory, that is, you can, when you have complied with the requirements, the same as happened with the Euro, join up.

But this is undoubtedly one of the issues that must most concern us in the near future and this is undoubtedly one of the issues on which the political forces must be in absolute agreement.

I will end now.

Q&A session with the President of the Government

Juan José Brugera.- As regards the question of improving the conditions of the competitiveness of the Spanish economy, several members are asking for some things to be definitively pushed through - this is already being done, but they are calling for greater attention - and then, a framework is being mentioned: R&D+i. It is also being said that the Corridor has been on halt for many years. "The Corridor is good - this was said by one member - for someone from Almeria, for someone from Murcia, for someone from Valencia, for someone from Tarragona, and it is also indirectly good for someone from Valladolid, because it improves the conditions under which the Spanish economy competes".

Two members mention an issue that is coming out often and that forms part of our concerns: not only dealing with a more technical employment offer for young people, but also offering the unemployed dual vocational training to deal with the greater demands of a more technical job offer. Over the course of these meetings, this has come out as one of the greatest threats to the recovery of jobs. In other words, this must be decisively supported.

And another member asks, "Mr President of the Government, these measures, which are highly structural and which must be applied in the long term, require pacts between the different political parties and it would seem that the current fragile situation is not helping much. In what vein are we going to be able to do this?"

President of the Government.- Indeed, the challenge is to improve competitiveness. Fortunately, I think it is being done. Of course the reforms proposed by the government in recent times had no other goal than to improve competitiveness.

You talk to me about specific issues. R&D+i: this Budget currently being debated is a lower Budget than the previous year, but however paradoxical this may seem… That is, the ceiling on spending is 5 billion euros lower than the ceiling of the previous year's Budget and we will have to continue doing this until such time as we come out of the excessive deficit procedure, and hence, the deficit falls below 3%. However, there is one positive aspect that is going to help us with this, which is that revenue is on the rise; in other words, revenue is rising this year, in 2017. This is a very positive figure.

All of this is relevant because there is a rise in R&D+i of over 4% in this year's public Budget, and we are fully aware that this is undoubtedly a key element in the medium and long term for our country.

And the same is true of the Mediterranean Corridor. I said to you earlier in my speech that Spain has unrivalled railway infrastructures. I am not saying the whole of Spain, because the region with the greatest difficulties is the north-west and even the north and the centre still does not have high-speed travel. We are working in the Basque Country and we are working in Galicia. Of course, Bilbao is a city of 600,000 inhabitants, which has a very powerful export sector, as does Guipúzcoa, and the high-speed railway has still not reached there, in the same way as it does not reach Galicia and other areas of Spain.

But the main priority is undoubtedly the Mediterranean Corridor, which I am absolutely convinced will clearly benefit everyone. It benefits people from Almeria, from Murcia, from Algeciras and it benefits everyone in general. There are some parts of the Mediterranean Corridor where substantial progress has now been made and works are under way on most of the stretches. I repeat, to the extent that we can make more budget resources available, this will be done; but these are already some works that obviously cannot be halted, as is clear, in the same way as the works cannot be halted on the high-speed line to Galicia and the Basque Country.

The issue of training is undoubtedly another key matter. The President of the European Commission presented a report not long ago to those of us who make up the European Council, which talked about Europe losing hundreds of thousands of jobs, however paradoxical this may seem, because of a lack of qualified personnel, above all in areas of the digital world, new technologies, etc. And within the issue of training, it is clear that continuous training is very important, vocational training.

The number of students of vocational training has increased greatly in recent times, which is very positive because that is what the world and the markets specifically are demanding. And dual vocational training is also greatly improving. We have a problem with dual vocational training, that is done especially by major corporations. They clearly have the greatest possibilities, they have it the easiest; it is much more difficult for small- and medium-sized enterprises to do this. And I want to remind you that in my speech, within the area of reforms that we were proposing are the reforms of training for young people and for the not so young.

We are now proposing… There is a debate going on in the European Union, because this was one of the agreements we took as part of the investiture. There was a proposal from a political group that I mentioned in my speech, in the last part. Fundamentally, it tackled the use of the Youth Guarantee funds for training those young people under contract, that is, to devote some hours to this, because they would be contracted, they would be collecting a salary, whilst at the same time receiving training. This is something we agreed as part of the investiture and that we are currently negotiating with the European Commission, but I agree with what has been said here that training is fundamental.

The pacts? That is an important question. The party that won here has 137 MPs. That has never before happened in Spain. The occasion on which the party that won the elections had the fewest MPs was back in 1996, when the People's Party won with 156 seats. The People's Party was able to reach an investiture agreement with what was then called Convergència i Unió, with the Basque Nationalist Party and with the Canary Island Coalition. The situation is totally different now; but that is why we are engaged in politics and here everyone has a responsibility. Of course, the greatest responsibility falls to the party with the most seats, which in this case is us, with 137, but the other parties also have their own responsibility and people are also going to be looking at them to see if they are responding.

How have things gone thus far? So far, pacts have been reached on some important issues. Firstly, on the investiture itself, as you know, which is no mean feat, and then a pact has been reached, for example, on the ceiling on spending - a very important matter - the distribution of the deficit targets between the regional government, Central Government and the Social Security system, which is important, and on some measures of a tax nature to meet the deficit target. Recently a pact was made on the matter of the stevedores and you know that on the matter of the stevedores this was a question of a national Parliament not opposing a European court and saying that it wasn't prepared to approve its ruling, but we finally managed to push this through. We have managed to make pacts on some very important things, as I said earlier, in relation to the Budget.

We are talking with several political forces. At this time, we have an investiture agreement with Ciudadanos that covers important issues: the Budget, Europe, foreign policy and defence policy. There are then other issues that have not been the subject of an agreement and on which we are reaching agreements as we go, or not. We also have some agreements with the Basque Nationalist Party and with the Canary Island Coalition, and I would like to reach agreements on State issues with the Socialist Party. The Socialist Party and the People's Party cannot adopt totally different approaches on the matter of Catalonia when it is supposed that we are both going to defend national sovereignty.

It is also important that on the matter of Europe and on what we think, as Spaniards in Europe, for us to have a common position, at least between the main political forces represented in Parliament. The same is true for foreign policy and defence policy.

In other words, I believe that there are many issues where this is possible. Now, can we undertake reforms? Yes, and the agreement on stevedores is an important structural reform.

We are talking about the issue of pensions. It would be very important to undertake a pension reform, because in Spain we now have 9.75 million pensioners and this is a very important issue which clearly requires a pact between all of us. It would be absurd for someone to try and resolve this through a majority.

We have also set up a committee to talk about education and we have set up a committee, together with regional governments, to look at the issue of regional financing. This is not a minor matter; it affects the financing of the key public services that are run by the regional governments: principally healthcare and education.

I believe that, if we all act with certain sanity then we can reach understandings and, furthermore, in Spain we must get used to seeing the same happening as in other countries in Europe. There are some countries with majorities, majorities have their advantages and disadvantages, and this situation here also has certain disadvantages, but the key is to be able, as a nation, to send out a message of confidence, calm and credibility to people.

J, J. Brugera.- There is another question on a different matter that is related to the current opinion we send out in calling these meetings, in which the Forum described the episodes of political corruption in general as a major threat to democracy. When will measures be taken that regulate and study not only the judicial aspects but also regulate and study the causes and prevent them, whilst also attending to the request recently made to us by the European Union?

President of the Government.- Corruption is undoubtedly a sad and unfortunate issue, and it is sad and unfortunate that we have to talk about corruption, but the goal now, as well as punishing those people that have taken decisions or have done things that comprise what is corrupt conduct and are unlawful, is to try and make an effort to ensure that this does not happen in the future, and hence we won't have to talk about the matter.

I believe that there are several types of measures, we have already taken some decisions and I am prepared to take all those decisions that may be useful to this end.

First, control measures. As in so many walks of life, prevention is important and many regulations have been amended here, some as important as the rules on public procurement. This is another structural reform that we have approved in recent months with the support of the Lower House; this is another important reform. That was an EU Directive and it was not easy, because these are very complex issues. Hence, first of all, regulations to improve control and I believe that we have made a great deal of progress on this matter and must continue to push on further.

Second, we must make an effort to investigate and uncover corrupt acts that have been committed. This means supporting those who are under a constitutional obligation to pursue this. I am talking about the State Tax Agency, the State law enforcement agencies, the police, the Guardia Civil, and I am talking about the judges and prosecutors. We have provided the public prosecution services and judiciary with a lot more resources, and we should continue doing this in the future.

Third, sanctions. We have also reformed the law on this matter, above all, by increasing the term for the prescription of offences and also by increasing sanctions.

I would like to say that some important effects are being seen. Many of the cases we have recently seen involve events that happened 15 years ago, however paradoxical that may seem, and many involve events that happened more than 10 years ago but which have only been uncovered now. These have been uncovered now, among other things, because there are a lot more resources for those that seek to pursue and uncover these offences. Hence, steps are being taken in the right direction.

Apart from that, political parties -without a doubt- will have to be much more careful especially when choosing people, y we are all taking steps in that direction. Now, I don't want to end this part or answer this question without adding something. I have spent many years in public life and I have known a great many political leaders from all the political forces and I can assure you that most people engaged in public life are honourable and decent, and there are thousands and thousands of people in the different local councils in Spain, above all in the small councils, who carry out a public function without charging a single euro and who combine their own job with this work. Hence, I believe that we should take this into consideration.

News normally affects issues out of the ordinary, rather than normal matters. You don't see a headline saying that nothing irregular has gone on in such and such a council, or that the vast majority of local councils have not suffered from any irregularities, or that the vast majority of people uphold the law and are honourable and decent people you can trust in. Sometimes, just one matter gives news for many days and for many hours.

Hence, let's also put things in their right place: we must combat corruption but we cannot say that this is a corrupt country, because this is not a corrupt country in my opinion. And then, something else which is important: democracy is, until proven otherwise, and I believe that this will never be proven, the best political system that exists. One of the basic pillars of democracy establishes the rights and liberties that people have, and the rule of law, and the presumption of innocence is one of the fundamental rights given to all citizens, politicians or otherwise. Here, I sometimes see that some people, rather than questioning the presumption of innocence, do something far worse, which is replace this with the presumption of guilt.

Hence, I, who have a certain tendency to behave moderately in life, would also like to do this on this matter. Let's always put things in their rightful place. We must continue taking decisions, we must improve things, we must do things better, but this is a country where at least most politicians and people deserve certain respect.

J. J. Brugera.- Another question about another matter, in relation to taxation. One of our members considers that the Basque quota is overly generous to the Basque County in his opinion, a region that takes part less in regional solidarity. Without questioning the conceptual model and taking into consideration regional solidarity, could a similar model be a good solution for Catalonia? Isn't the recent agreement on the Basque quota even more favourable, if possible, to the Basque Country? What solution could we see? Could we aspire to some form of rate or is the government afraid to open Pandora's Box? What would this mean?

President of the Government.- The government, when it is convinced of something, is not afraid to open anything. Now, what the government likes, when it takes a decision, is to know what consequences this has.

The Basque quota, the Convention system, similarly to the Concierto policy in Navarre is contained in our Constitution, as you know, as it was in two provinces, Álava and in what is now the Provincial Community of Navarre, and this was in force throughout the previous regime. When the Constitution was debated, everyone there said: we must find rules for co-existence that are valid for everyone; so, we are all going to renounce our own rigid approaches in order to draft something that is called a Constitution. They talked for two years and that is why the Basque quota was approved, and that is why the system of autonomous regions was established.

There were people in that Parliament who believed that there shouldn't have been autonomous regions; there were people in that Parliament who believed that there should have only been two or three, which were the three that endorsed the Statute of Autonomy (Catalonia, the Basque Country and Galicia, as you know) and there were people who were in favour of not having national sovereignty and that the right to self-determination should have been included there - which would have been the first Constitution in the world to do so.

What was done then? What common sense dictates, "we don't all think the same, but between us all we will set some rules that work in order to live together, and I must give way on this, and you on that, etc.". That is why the Statute of Autonomy came about. I don't know whether sometimes we don't realise, but we are in the period of Spain's history with the highest degree of self-governance, and there is no other country in the world that has a level of self-governance such as in Spain: not the länders in Germany, or in Canada or anywhere else. Back in 1978, Spain was a centralised State. And some people now want to breach this agreement that was reached, an agreement that was so hard to reach, which took such a long time and which was supported by everyone.

Just imagine if someone came up with the idea that "instead of the right to self-determination, we should do away with five regions": That cannot happen here. The rules of the game are set to be followed and, when you reach agreements, everyone must cede some ground.

This was approved when we drafted the Constitution and an agreement was reached on the Basque quota. We also want to reach an agreement on regional financing. This is more complicated; there are those who don't come to the meetings. But the Basque quota is included in the Constitution, they pay taxes in line with what was agreed back then and, in reality, questioning all of this now does not seem fair to me. You cannot change the rules of the game because it suits you or doesn't suit you. That debate is impossible.

I am going to introduce two or three more issues into the debate. If you take the reports from the Bank of Spain and look at the deposits and credits that exist in Spain: look at the Autonomous Region of Castile and Leon, you will see that the number of deposits that there are and the credits that are given, or look at them in Galicia, and then look at the number of deposits there are in other regions of Spain and the number of credits that are given. That is also solidarity. And look at the National Insurance contributions and the pensions that are paid out. That is also solidarity. We cannot build a country based on the idea that you are being treated unfairly while others are being treated better, because it is not fair and because you cannot build anything by doing that.

I invite you to do this, although I appreciate that it is a slightly strange invitation, but I did this. When we presented the General State Budget this year, I put the front covers of all the regional newspapers of all of Spain on the desk in my office and I showed them to someone who considered that his region had been unfairly treated. I showed him all of them and it then transpired that we had treated all the regions badly, except the Canary Islands and the Basque Country, probably because these two regions opted to say how well everything had been done, of course, because, if not, how could they justify supporting the Budget? We can't build a country like this.

J.J. Brugera.- Finally, there are lots of question about the issue of Catalonia that you are constantly referring to: "operation dialogue does what it does"; "what expectations can those people opposed to independence have of finding a definitive solution to the position of Catalonia in Spain?"; "there is uncertainty and fear that this may affect the economic situation", etc. In other words, aside from what you have already said, can we hope for anything within your policy, President of the Government? Those are a summary of the questions on this matter.

President of the Government.- It goes without saying that I understand whoever asked this question; it goes without saying. "What is this?". "When are we going to put this situation to rest once and for all?"

I have told you how I see things and I believe that I have said this honestly and with clarity. I am not going to authorise any referendum on independence, I am not going to authorise this. I have said this before, because I don't want to and because I cannot, because it is not down to me. For those two reasons which are different.

We cannot accept that dialogue is true dialogue in which the only thing one party wants to talk about is the minor details of holding a referendum on how to liquidate national unity and national sovereignty. We can't accept this and much less can we accept that, if we don't reach an agreement, we will be presented with a law, as I said earlier, and I reiterate, to approve a new Constitution in just a day and liquidate the unity of Spain. We simply cannot accept that.

As so often happens in negotiations in life, everybody may have their own reasons for and against something, but some people have more reasons than others. And while impartiality is all well and good, it is not appropriate all of the time and in all regards.

J. J. Brugera.- I have summarised the questions asked, President of the Government. Thank you very much for coming, we hope you will continue to do so, and we now bring the meetings of the 33rd edition of the Economic Forum of Sitges to a close.

Thank you all very much, and the President of the Government too.