Minister to tighten screw further if "realistic" budget fails to deliver

Spanish Economy Minister Elena Salgado on Tuesday insisted the country was on the road to recovery after having regained the confidence of the investment community as she opened a debate on what she called the "realistic" targets set out in the 2011 draft state budget.

Spain pulled out of six quarters of what turned out to be its worst recession in 60 years in the first quarter of this year. The budget predicts GDP will rise 1.3 percent next year after contracting 0.3 percent this year, while Salgado told Congress that growth would outpace the euro-zone average from 2013. However, a number of experts, including the IMF, believe the 2011 figure is on the optimistic side.

"We have left behind a year and a half of deep recession and the economy is starting to recover on the back of improved confidence," Salgado said at the start of a two-day debate on the government's spending and revenue projections for next year. The minister said the "budget has been drawn up on a realistic economic analysis" and pledged to introduce further measures to ensure the government met its target of reducing its budget deficit should results end up falling short of expectations.

The plan is to trim the shortfall to 6 percent of GDP from 11.1 percent in 2009

The government is aiming to trim the shortfall in its books to 6 percent of GDP next year from 11.1 percent in 2009 through a series of spending cuts and tax hikes.

The minority Socialist administration is guaranteed of being able to push the budget through parliament after reaching agreements with the center-right Basque nationalist PNV group and the Canaries Coalition (CC).

Opposition Popular Party leader Mariano Rajoy questioned the assumptions behind the budget, which he claimed would be "harmful" for the economy, although he refused to specify where he would make cuts when pressed to do so by Salgado.