Speech by President of the Government at Portugal-Spain Business Meeting

2017.5.30

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Vila Real (Portugal)

Mr Prime Minister of Portugal, Mr President of the Confederation of Business Leaders of Portugal, Mr President of the CEOE; ladies and gentlemen,

It is a pleasure to address all of you at the start of this event which, as you know, brings together the main business organisations of Portugal and Spain. Both countries are each other's preferred partner, with close neighbourhood relations and strong bilateral ties. We also share many interests as members of the European Union and of the Eurozone. I wish to thank the organisers for the work done to make this seminar possible.

Both Portugal and Spain have had to tackle a very tough economic crisis over recent years. This crisis has tested the ability of our economic systems and companies to adapt. I believe that we can now say that we have come through this test. For that reason, I would firstly like to congratulate Portugal, its companies and its people on the efforts they have made and on the reforms they have undertaken. As a result of that effort, Portugal, as is the case in Spain, is now growing and creating jobs.

Spain also suffered from the effects of an unprecedented crisis in our history. Now, thanks to the ambitious pro-reform agenda we set in motion back in 2012 with the adoption of measures that were not always easy to take, the situation has been completely reversed. Spain is now growing faster than the other Eurozone economies and creating jobs at an unprecedented rate. Furthermore, this is balanced growth in which the foreign trade sector and competitiveness play a key role.

In 2016, the Spanish economy grew by 3.2%, and headed up, for the second straight year, growth in the main economies of the Eurozone. We will continue to grow in 2017, by at least 2.7%. This was unthinkable just four years ago. Moreover, this growth has translated into job creation: we have created 1.5 million jobs since 2014, at a rate of half a million jobs a year.

And furthermore, the figures coming through for this year, for 2017, are further corroborating this change of course. I will mention just two figures: Spain continues to head up the growth of the main economies, with a rate of growth of 0.8% in the first quarter, higher than the Eurozone average of 0.5%. That amounts to 3% in year-on-year terms and, if we continue at this rate, the Spanish economy will recover the level of GDP of before the crisis during this first half of the year. And the first Labour Force Survey of the year shows that the number of people now in work in Spain has reached 18,438,300.

This radical change has been possible thanks to the actions taken in different areas. I will mention just four of these:

  • First, the efforts to guarantee the sustainability of the public accounts, which have allowed the deficit to be more than halved since 2011 and thus recover market confidence. This has also happened in Portugal, which should be congratulated on having exited the excessive deficit procedure, as you all know.
  • Second, the re-structuring of the financial sector, which has allowed credit to flow once again and reduce financial costs.
  • Third, the labour reform, which has laid the foundations for the strong job creation we are seeing.
  • And lastly, the energy reform to guarantee the sustainability of the sector and reduce energy costs.

All of these reforms have been crucial for the foreign trade sector, because they have enabled our companies to become more competitive and our products more attractive. This is also reflected in the figures: before the crisis, we exported one quarter of our national GDP, whereas we now export more than one third. In 2017, the foreign trade sector continues to contribute to growth. In March, the export of goods hit a new all-time high, with growth of 16.9% to 26.23 billion euros. In total, in the first quarter of 2017, our exports grew by 14.1% compared with the same period of last year.

Everything I have just mentioned has translated into Spain having a positive foreign trade balance for the last five straight years. This is an unprecedented event in our recent history. In other words, in contrast to what happened in other times, the Spanish economy is growing without the need to get into debt and it is growing because it is producing and it is exporting.

And naturally, the transformation of the business fabric and culture has been key throughout this process. Spanish companies are increasingly aware of the opportunities offered by the foreign trade sector and they have incorporated this into their business strategies: they are exploring new markets, specialising in products and technologies and creating synergies. And it is not only the large corporations doing this, as in the past, but increasingly small- and medium-sized enterprises are joining this list. Consequently, since the start of the crisis, the number of Spanish companies exporting has increased by 50% to now stand at a total of 50,000 companies regularly exporting beyond our borders.

The European Internal Market has been a key asset in this effort to internationalise, and within this framework the close ties between Portugal and Spain constitute an element of competitiveness and dynamism.

That is why this seminar is an opportunity to explore new opportunities between our two markets, in both Europe and throughout the world. As two countries that are neighbours and friends, our trade relations are very close. Portugal is a very important country and marketplace for Spain, with which it maintains an intense flow of trade and investment. Our bilateral trade has increased constantly over recent decades to amount to a total of 28.8 billion euros in 2016. Many companies now look at the Iberian market as a single entity.

We must harness this privileged relationship. The border between Spain and Portugal is nowadays a space for constant exchanges and our bilateral trade constitutes a very important source of growth for the border regions of both countries. For that reason, for the first time, this Bilateral Summit placed special focus on cross-border cooperation. Nowadays, crossing the border is a perfectly natural occurrence for our citizens. Many people from Extremadura or Galicia frequently cross the border, for example, to go shopping or for leisure activities while many Portuguese citizens cross the border to Spain. There are 2,600 joint enterprises that operate in both markets.

In order to support these exchanges, Portugal and Spain are very closely cooperating in such areas as energy and transport infrastructures, environmental cooperation, tourism and science and technology, as well as on employment issues, social security systems and security and defence.

We have spoken about all these issues at the Summit and the companies that you represent have all played a leading role in this. Both our governments will continue working on stepping up this cooperation.

I will draw to a close now. As I said, Portugal and Spain have overcome a very tough period, but there is still a lot to do and, as members of the Eurozone, we will continue working to bed down this recovery, continue creating jobs and developing a model of balanced growth that provides further stability to the single currency.

The role of companies is essential in this task. The permeability of relations between our two countries constitutes a business opportunity for them and well-being and job creation for both our countries.

That is why it is a pleasure to be here today in Vila Real. I hope that this meeting and the intense communication between both communities of business leaders will pave the way to future joint projects. For my part, my government and the Spanish public authorities are clearly committed to continuing to extend economic and trade relations between Spain and Portugal.

To end, I would like - I will also do this in the press briefing - to take this opportunity to thank the Prime Minister of Portugal, António Costa, for organising these meetings, which undoubtedly provide very good opportunities and also help us to maintain and advocate positions that we share at other forums, fundamentally at European forums.

Thank you very much.