Cameron and Rajoy to meet in Madrid next week

Meeting at 10 Downing Street
last February

The Gibraltar situation is on the agenda

MADRID The Ministry of Foreign Affairs sources say that UK Prime Minister David Cameron is to meet his Spanish counterpart, Mariano Rajoy in Madrid next Monday, although the fact has to be confirmed officially. This would be the first time they meet in Madrid, though they met last February in London and see each other periodically at EU summits. If the meeting is confirmed, two subjects are almost inevitably to be on the agenda: the economy and Gibraltar. There are plenty of discrepancies in both countries' positions on these subjects.

'Spain scare roils Europe markets': new media 'attack' on Spain

MADRID Just as the emergency budget for 2013 is getting approved in parliament, both the Wall Street Journal and the Financial Times headline the recent demos, still going on last night and a good part of today. The budget is expected to be one of the most austere ever, with swingeing cutbacks and reductions and pay freezes. Among other things Prime Minister Mariano Rajoy is blamed for his government's indecision in asking for a bailout. The BBC's Today programme this morning also dealt with the subject, as do many British and other European newspapers. In the meantime, some of the Spanish media are wallowing in 'poor mes'. Watch this space for a view on the new budget and other economic news.

Rajoy: "No increase in VAT or Income Tax in 2013 budget"

Ooops, wrong IVA!!
(This is Iva Jerkovic,
but we decided to
leave her anyway)

President says 'evil minds insinuate' that his government is waiting until after early elections in Galicia and the Basque country

MADRID Spain's Prime Minister, Mariano Rajoy said at a press conference recently that he had no plans to increase VAT from its present 21%, nor Income Tax (IRPF) in the budget for 2013. He added that he hoped not to have to make 'such difficult decisions' as those he has had to make in the first months of his legislature, in order to meet the deficit head on. He stated that he hadn't wanted to raise these taxes but they had to be, as 'reality is reality' and they were necessary to contribute toward the 'consolidation of the budget' and aimed at recovering the economy and create employment in the medium term. He admitted that these increases had not been part of his electoral manifesto and he can understand the ill feelings they have created. He would 'return to the way things were' as soon as possible. (Prospero note: We've heard it all before, not only from the previous government, which for too long denied the existence of a crisis, but also from the former governments of Greece, Portugal and Ireland, just before asking for a rescue. So let's be warned.) (But see what we published in April: VAT to go up next year... Who do you believe, if anybody?)

"It's the only thing we can do," says Government

Mariano Rajoy

MADRID Those are the words Mariano Rajoy, President of the Spanish Government, repeated several times in is speech on the new measures he is taking against the "very delicate situation" (his words) the country is in. Below we offer a listing of some of the measures, cutbacks and tax reforms he is proposing, but perhaps the main one is a raise of three percentage points in VAT, which goes up from 18% to 21% in the general rate and two points for the reduced rate (which includes tourism related items but not food, which remains the same at 4%) from 8% to 10% and will cost the 'average' (have you ever met one?) €450 per year extra. The plan he announced yesterday morning in a two hour speech to a plenary session of the Chamber of Deputies and is expected to be largely  approved by the Council of Ministers on Friday, is one of the hardest ever applied in this country. The plan is designed to raise income and lower costs, which, together with past and future measures, to represent a total of €65 billion, or 6.5% of GDP, in the space of two and a half years. These new measures, the fourth such package in as many years but more severe thahn any before, were announced at the same time as miners from Asturias, many of whom walked to Madrid over more than 400 kilometers, were protesting loudly outside. The measures include:>>>

Government to announce €30billion in further cutbacks this morning

Mariano Rajoy

Large increase in VAT is expected

SPAIN (Agencies) Mariano Rajoy, President of the Government, is about to present the country with a new round of cutbacks and tax measures, according to the Spanish media. The objective is to meet the demands from Brussels about lowering the national deficit, the result of the EuroGroup meeting held earlier this week, which did relax these demandsomewhat. It is widely believed that the measures will be 'brutal', as one online paper put it. However, some say it will not be as high as the €30 billion - about 3% of GDP - that others expect, aimed at pacifying Brussels for the latest bank rescue pckage. The same sources think that IVA (VAT) will go up significantly, some say up to 23% from the present 18%. One of the many reasons behind the new round of cost cutting (mainly but not exclusively in education, it is thought) is that the country's deficit last year was 8.9% of GDP instead of the 6% once predicted. Some other expected cutbacks: Reducing cost of public servants by asking them to cut out one annual 'extra' salary; freeze pensions; reducing  unemployment benefits; closing down public television stations, more likely the regional ones. The internal debate in its various factions has become well known but the Government is saying officially that nothing has been defined and these are 'merely technical calculations'. We shall see.

Rajoy invested as Spanish Prime Minister

Rajoy, bathing in applause, bottom r.

SPAIN (Agencies) Mariano Rajoy was elected as Prime Minister - or to use the official phrase, President of the Government, not the State - at the General Elections on November 20. He was invested by the Spanish Parliament as such this morning after what is called an Investiture Debate, whereby the political parties with representation state what they will be doing during this legislature. The main opposition will be the PSOE, which  has been in government for 16 years. Alfredo Pérez Rubalcaba delivered the PSOE's message instead of the former President, José Luis Rodríguez Zapatero.