Spain says no recovery until 2014 in face of falling GDP

 

The Spanish government yesterday said that its recession-struck economy will contract by almost three times more in 2013 than it previously forecast, forcing Madrid to extend its deficit reduction programme by a further two years.

The deputy prime minister Soraya Saenz de Santamaria said the GDP of the eurozone struggler, which is grappling with the fallout from a real estate and banking crisis, would shrink by 1.3 per cent, up from its previous 0.5 per cent contraction estimate.

Ms Saenz de Santamaria also said that the government’s fiscal deficit would be 6.3 per cent of GDP this year, rather than the 4.5 per cent expected previously. Madrid had planned to bring its deficit down to the European Commission-mandated target of 3 per cent of GDP by next year. Now that target will not be reached until 2016.

Public borrowing is due to decline to 5.5 per cent in 2014, 4.1 per cent in 2015 and 2.7 per cent in 2016. Ministers said that the country’s new slower deficit-reduction path had been approved by the European Commission.

This week, the Spanish statistics agency reported that employment in the Mediterranean country has breached 6 million, or 27.2 per cent of the workforce. But Ms Saenz de Santamaria said this ratio would fall to 26.7 per cent in 2014, when annual growth would pick up to 0.5 per cent.

“2014 is the year of recovery,” said Luis de Guindos, the economy minister. “We’ll collect the fruit of the economic reforms we’ve done.”

Yet the latest lending figures from the European Central Bank belied that confidence. They showed that businesses across Europe are still being starved of credit. The annual rate of bank loans growth to the private sector in the eurozone was minus 0.3 per cent in March. The weak growth of credit is a blow for hopes that the Continent’s  recession, which began in autumn 2011, could be easing.

The ECB also reported that the annual growth in M3, a broad money supply measure watched by the  central bank as an early warning of future inflation, fell sharply in March from 3.1 per cent to 2.6 per cent.  This was the lowest rate since April of last year.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific