New economy minister vows to sweat to create jobs

Finance chief Montoro claims Popular Party government not preparing ax, but rather reforming zeal

The two men charged by incoming Spanish Prime Minister Mariano Rajoy with resolving the highest unemployment rate in Europe, while simultaneously getting Spain's financial affairs back in shape remained undaunted by the enormity of the task facing them when they were sworn in on Thursday as Cabinet members.

Both Economy Minister Luis de Guindos and Finance Minister Cristóbal Montoro exuded "optimism" about returning the Spanish economy to the rude health it enjoyed before it crumbled under the worst crisis it has suffered in living memory.

Montoro faces the challenge of ensuring Spain complies with its commitment to reduce its budget deficit to 4.4 percent of GDP next year before bringing it back within the European Union ceiling of three percent the following year.

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In the investiture debate earlier in the week Rajoy estimated the new conservative Popular Party government would have to find budget savings of 16.5 billion euros to meet the deficit target for 2012. However, experts believe Spain will fail to meet its goal for this year of reducing the shortfall in its finances to 6.0 percent and will need austerity measures amounting to as much as 40 billion euros to achieve next year's target.

This has sparked fears of spending cuts that will erode the reach of the welfare state; fears which Montoro on Friday took pains to dispel. "We're not here to cut; we're here to reform," he said. "This economic crisis will be over soon, with the work and effort of everyone."

Experts say the greatest risk in failing to meet the deficit target lies with profligacy on the part of the country's regions. It is logical, therefore, that Montoro ? an economist, who also served as finance minister in the former PP government of José María Aznar ? has also been tasked by Rajoy with overseeing the country's public administrations.

For his part, Luis de Guindos, identified job creation as the "number one objective of the government."

According to the latest official figures from the National Statistics Institute, Spain's jobless rate at the end of September stood at 21.5 percent, more than double the average in the EU. The OECD predicts unemployment will rise to an average 22.9 percent next year with an expected contraction in economic activity in the fourth quarter of this year extending into 2012.

While acknowledging that "we are going through a period of multiple crises," De Guindos said he believes Spain can surmount the problems facing it.

"I am convinced that with the effort of everyone, and with the right economic policy, Spain will return to the path of economic sustainability [...], and to the levels of prosperity we should never have lost, as well to a situation in which growth is sufficient to create employment, which has to be the number one objective of the government," the incoming minister said.

Having served as the secretary of state for the economy under Aznar, De Guindos said he would be returning "home" to the Economy Ministry "whose personnel are my friends."

After leaving the government in 2004 when the PP lost power to the Socialists, De Guindos, a respected economist with liberal ideas, held a number of positions in the private sector, heading up Lehman Brothers' activities in Spain, before leaving in the wake of the subprime crisis.

Apart from the economy, De Guindos will oversee efforts to enhance Spain's competitiveness. Rajoy has also handed him the science and innovation and trade portfolios.

Luis de Guindos receives the Economy Ministry portfolio from Elena Salgado.
Luis de Guindos receives the Economy Ministry portfolio from Elena Salgado.

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