(Reuters) - Spain's economy is on track to expand by a better-than-expected 1.0 percent in 2014, allowing moderate job creation for the first time in six years, Spanish Prime Minister Mariano Rajoy said on Tuesday in his annual state-of-the-nation address to Parliament.
Rajoy, half way through a four-year term, said his No. 1 priority is to reduce one of Europe's highest jobless rates, but did not provide a fresh forecast for unemployment, which is seen ending this year at just under 26 percent, its current rate.
To spur companies to create jobs, Rajoy said he would immediately implement 24 months of lower social security contributions on new hires for firms that expand their staff -- responding to a long-standing demand from employers.
Rajoy, of the centre-right People's Party, also promised income tax relief for lower wage earners next year as economic growth picks up to 1.5 percent, three years after he broke his campaign pledges and raised income tax to cut one of Europe's highest public deficits.
The new forecast for 2014 economic growth was in line with a fresh outlook on Spain's economy due from Brussels on Tuesday, according to a report in El Pais newspaper, which cited a draft document from the European Commission.
The Spanish government's official forecast in the 2014 budget had been for gross domestic product to grow 0.7 percent this year, but economic officials had already hinted growth would be more robust, mostly on the back of stronger exports.
Two years after teetering on the brink of default, and after six years of economic doldrums, Spain's borrowing costs have fallen to near-record lows. Exports have jumped as companies have become more competitive due to more flexible rules on hiring and firing, introduced by Rajoy two years ago.
That has helped the economy to recover from the 2008 collapse of a long building and housing bubble that brought Spain's banks to their knees in a crisis that threatened to bring down the euro common currency.
"Spain was seen as dragging Europe down and now it is seen as a driver," Rajoy said in a 90-minute speech that will be followed by debate with opposition leaders.
Spain's short-term borrowing costs dropped on Tuesday at an auction of 3-month and 9-month paper, days after Moody's credit rating agency bumped up its ratings on Spanish debt, citing reforms that have helped make the economy more competitive.
reuters.com
Rajoy, half way through a four-year term, said his No. 1 priority is to reduce one of Europe's highest jobless rates, but did not provide a fresh forecast for unemployment, which is seen ending this year at just under 26 percent, its current rate.
To spur companies to create jobs, Rajoy said he would immediately implement 24 months of lower social security contributions on new hires for firms that expand their staff -- responding to a long-standing demand from employers.
Rajoy, of the centre-right People's Party, also promised income tax relief for lower wage earners next year as economic growth picks up to 1.5 percent, three years after he broke his campaign pledges and raised income tax to cut one of Europe's highest public deficits.
The new forecast for 2014 economic growth was in line with a fresh outlook on Spain's economy due from Brussels on Tuesday, according to a report in El Pais newspaper, which cited a draft document from the European Commission.
The Spanish government's official forecast in the 2014 budget had been for gross domestic product to grow 0.7 percent this year, but economic officials had already hinted growth would be more robust, mostly on the back of stronger exports.
Two years after teetering on the brink of default, and after six years of economic doldrums, Spain's borrowing costs have fallen to near-record lows. Exports have jumped as companies have become more competitive due to more flexible rules on hiring and firing, introduced by Rajoy two years ago.
That has helped the economy to recover from the 2008 collapse of a long building and housing bubble that brought Spain's banks to their knees in a crisis that threatened to bring down the euro common currency.
"Spain was seen as dragging Europe down and now it is seen as a driver," Rajoy said in a 90-minute speech that will be followed by debate with opposition leaders.
Spain's short-term borrowing costs dropped on Tuesday at an auction of 3-month and 9-month paper, days after Moody's credit rating agency bumped up its ratings on Spanish debt, citing reforms that have helped make the economy more competitive.
reuters.com
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