How Rajoy Plans To Stimulate Spain’s Economy

How Rajoy Plans to Stimulate Spain's Economy

How Rajoy Plans to Stimulate Spain’s Economy

Spain’s economy is continuing to consolidate the recovery initiated in the second half of 2013. The recapitalisation of the country’s banks, wage cuts which have increased the competitiveness of its exports, and incentives to encourage foreign investment flows have all contributed to the uptick. Many economists and market experts are forecasting an acceleration in GDP growth over this year and through 2015.

But Prime Minister Mariano Rajoy is not resting on his laurels! Last month, the government announced a fresh raft of stimulus measures to boost domestic demand and provide credit for businesses focusing on innovation and new technologies – seen as the pillars of sustained growth.

PUBLIC-PRIVATE INVESTMENT

The funding for the government’s over 6 billion euros growth-centred initiative will be a mix of public and private, with the aim of keeping a tight rein on public spending.

Over the last three years, Spaniards have been struggling with tough spending cuts to lower the public deficit and weather the downturn. But now it’s time to look ahead and the government has said it will shell out about 3.5 billion euros in reforms to encourage companies’ internationalisation, boost entrepreneurship and promote more public-private collaboration in various sectors.

These reforms include:

• Continued support for the automotive industry, with a further extension of the Plan Pive subsidy scheme. This offers buyers of new cars who turn in an older car a 2,000-euro rebate, half from the state and half from the car dealer.

• An over 300 million euros credit line, plus guarantees for an additional 600 euros, specifically for investments in technology and in areas like R&D or job creation. Spain’s Official Credit Institute will provide the financing.

• Incentives to promote re-industrialisation and improve competitiveness across industries to the tune of 750 million euros.

JOB CREATION STILL PENDING

Economy Minister Luis de Guindos has said Spain is expected to significantly create job opportunities this year and through 2015. With around a quarter of the country’s workforce unemployed, the government is pushing ahead with a series of reforms, including a major overhaul of its tax system. If it works, this move will create hundreds of thousands of new jobs. The fiscal shake-up is part of the National Reform Plan submitted to the European Commission earlier this year. More so-called second generation reforms are expected over the coming months as Spain continues its road to recovery.

For information on investing in Spain, contact corporate law firm Argali Abogados.

Leave a Reply