Spain Tax Cuts "On the Horizon" : Rajoy

 

Mariano Rajoy commented this weekend how the government will announce plans to cut taxes within a year and predicted that the Spanish economy was "on the cusp" of growth.

The PM was speaking at a political rally in Pontevedra, where he forecast how Spain's economic stability would improve enough to allow lower taxes, though he did not add any further details.

Although members of the PP have called for taxes to be lowered in the past, the Government raised them after taking office in a bid to narrow a large budget deficit.

The economic situation "is not good yet, but it's better than a year ago," Rajoy said, recalling that the country's risk premium – the extra return investors demand to hold the country's benchmark 10-year bond compared with equivalent German debt – is no longer weighing heavily on the country's finances.

Several days prior to the victory of the PP in the General Election of November 2011, the country's risk premium stood at 460 basis points.

It climbed to as high as 550 basis points in June 2012 but has fallen since and ended at 268 basis points at Friday's close.

"I know there's still lots to do. I know the objectives have not been met," Rajoy said, though he pointed to positives such as the fact that Spain will post its first trade surplus in decades this year and exports are at a record high.

The PM said Spain's economy was "gaining ground" quarter-by-quarter and predicted that the data would improve further in the coming months and that Spain would soon emerge from a long recession.

Spain's GDP has fallen for nine consecutive quarters, although the figures have improved lately and the government says the economy may grow slightly in Q3.

Rajoy also defended reforms aimed at spurring job growth in a country where the unemployment rate stood at 26.2% in Q2.