Spain eases austerity as 2014 budget banks on recovery | Business| Economy and finance news from a German perspective | DW | 27.09.2013
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Spain eases austerity as 2014 budget banks on recovery

Spain’s government has presented its most pain-free budget in many years, banking on a nascent economic recovery gathering steam in 2014. Nevertheless, Prime Minister Rajoy still needs to dole out some bitter pills.

Based on a growth prediction of 0.7 percent economic expansion the Spanish budget for 2014 included less cuts and greater stimulus, the government in Madrid said Friday.

Unveiling the government expenditures for next year, Finance Minister Cristobal Montoro said the budget proposal was one for economic recovery which would allow the government to open the door to job creation.

Spain's 2014 budget follows a government revision of key economic data, forecasting gross domestic product (GDP) to rise 0.7 percent rather than 0.5 percent, as previously predicted, and lower-than-expected unemployment with a rate of 25.9 percent.

The debt-laden eurozone country is just climbing out of a two-year recession, expecting a first quarter of economic expansion in the July through September period.

The positive development is expected to help Prime Minister Mariano Rajoy slash Spain's huge budget deficit from an estimated 6.5 percent of GDP in 2013 to 5.8 percent next year.

In order to achieve that, Madrid also plans to freeze civil servants' salaries for the fourth consecutive year, after a 5-percent cut in 2010. Moreover, a tax reform planned for spring is to close loopholes on corporate taxes and to create more revenue from sales taxes.

In addition, the government on Friday adopted a pension reform plan, which it said would save 800 million euros ($1.08 billion) next year and 33 billion euros over the course of the next decade.

In the 2014 budget proposal, education and health a spared spending cuts, while expenditure for research and development is even planned to increase.

uhe/dr (Reuters, dpa)

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