Spanish Government to offer small business loans

 

Under the pressure of one of Europe's worst economic crises, Prime Minister Zapatero yesterday presented a series of proposals that it hopes can serve as the basis for a broad political agreement over crisis-fighting measures.

During a meeting with journalists, Finance Minister Elena Salgado said that the government will use its credit arm ICO to offer loans of up to EUR 200,000 to small and medium-sized business and self-employed workers.

In a move intended to make technology industries a priority, Salgado also said the government would like to raise the tax deductions for companies in the sector from 8% to 12%.

The Spanish government also proposes to reduce the tax rate from 16% to 8% for remodeling residential properties and the installation of energy-saving equipment in a bid to provide jobs for Spain's growing number of unemployed construction workers.

Salgado added that the government would improve the energy efficiency in 1,000 of Spain's federal buildings and will further expand the plan to 2,000, to include buildings that belong to city and regional governments.

She continued that the government expects the plans to refurbish private and public buildings will provide work to roughly 350,000 construction workers.

"The proposal is a work in progress and will be finalized in two months," Salgado said in a meeting with journalists. "We are going to work with the other political parties and will defend our proposals and listen to others; we want as wide of a consensus as possible."

Spain's Socialist government presented the proposals on Monday to the other parties represented in parliament. The next step is for the government to discuss the plans with the country's opposition parties on Wednesday.

Spain is struggling with the collapse of a ten-year boom in construction that has thrown the whole economy into a deep recession, sent tax revenue plummeting and social welfare costs soaring. The government had a budget deficit equal to 11.3% of gross domestic product in 2009, nearly three times the limit of 3% of GDP for European Union countries.

Heightening the sense of urgency for Spain to deal these problems has been a sharp rise in financing costs for fiscally strained European governments since Greece admitted late last year its budget deficit was much higher than previously thought.