Spain situation has improved considerably: Trichet

 

Spain's financial situation has improved considerably, but policymakers must remain alert, European Central Bank President Jean-Claude Trichet said in an interview with Expansion newspaper published on Tuesday.

Spain is struggling to balance anemic growth with austerity measures enforced to avoid being dragged into a euro zone debt crisis.

"Spain must continue to give special focus to resolutely applying new structural reforms with the aim of getting the highest possible potential growth, improving its productivity and thus restoring investor confidence," he told the paper.

Spain has introduced new labor laws which make it easier to hire and fire workers and restrict excessive wage growth in an attempt to increase competitiveness and productivity. It has also overhauled its banking sector, forcing unlisted savings banks to seek private capital or face nationalization.

All governments must strictly apply the plan adopted at a July 21 meeting in Brussels, Trichet said, when an emergency summit meeting of leaders of the 17-national currency area pledged to conduct a second bailout of Greece.

Trichet said it was important that analysts and market participants knew that the ECB is supplying unlimited liquidity in euros at fixed rates of interest over one week, one month and three-month periods.

Last week's agreements between five central banks demonstrated the close co-operation between the ECB and the U.S. Federal Reserve, he said.