A couple of recent milestones - a pat on the back from Brussels on Spain's likely inclusion in the first round of monetary union and the signing of a historic labour pact between employers and unions - have boosted ministers' spirits. The Governor of the Bank of Spain, Luis Angel Rojo, even warned Mr Aznar's team not to let the euphoria get out of hand. "More efforts are still needed," he said.
Not everyone is euphoric. Trade union leaders, who have just signed an accord with the employers' organisations that will transform the country's labour market, heard boos and protests from their members during last week's traditional May Day parades. The pact will make it easier for companies to lay people off: they will have to give 33 days notice for each year worked.
Employers have long complained that entrenched workers' employment rights - a legacy of the Franco years that unions and the previous Socialist government were reluctant to discard - encouraged employers to issue short-term ("junk") contracts rather than take on permanent staff.
The unions hope that junk contracts will be replaced by longer-term or indefinite ones, especially for young people, more than half of whom have never had a proper job, and that the country's 22 per cent unemployment rate, twice the EU average, will fall. But the employers admit they do not know how many new jobs the deal will create.
The pact now goes to parliament, and the Labour Minister, Javier Arenas, who kept out of the way during three months of tough negotiations, promised to pilot the agreement through before the summer, when employment traditionally picks up.
Spain's stock market leapt to historic heights after the European Commission recently predicted that Spain, unlike Italy and Greece, could qualify for monetary union first time round. Huge demand for shares in the privatised state companies Telefonica and the petrol concern Repsol kept markets on the boil. And when the International Monetary Fund predicted an economic growth rate above the EU average, the government's heart fairly burst with pride.
Inflation, at 2.4 per cent, is within the limit required for monetary union, as is the budget deficit. Public debt, at 68 per cent of GNP (slightly above Brussels requirements) is falling, and interest rates and currency fluctuations are on target.
But the ruling Popular Party has yet to win the affection of the public. Opinion polls suggest that most Spaniards remain non-committal about the government's political achievements. The public's main concerns remain unemployment and Eta terrorism: two issues on which little progress has been made in the last 12 months.
If Spain passes the single currency exam, Mr Aznar may be tempted to go to the country in 1999, a year before he has to, to seek an absolute majority and disengage from the burdensome but necessary alliance with Catalan and Basque nationalists.
Mr Gonzalez suggested recently that the government might call elections even sooner, in late 1998 before joining the single currency, if the economy and the polls continue to improve. But Mr Aznar, on a visit to the United States this week, insisted he would run his full term. He still has everything to gain by hanging on.Reuse content