Rajoy pledges no more tax hikes but fails to rule out further austerity in 2013

“Discontent” of Spaniards over the government’s spending cuts "understandable," says PM

Spanish PM Mariano Rajoy and French President François Hollande in Madrid on Thursday.
Spanish PM Mariano Rajoy and French President François Hollande in Madrid on Thursday.Emilio Naranjo (EFE)

Mariano Rajoy on Thursday stated there would be no further tax hikes in the state budget for 2013 and that the government fully anticipated Catalonia and Valencia’s request to access the 18-million-euro bailout fund for Spain’s struggling regions.

“I already know what the regions will ask for this year,” said Rajoy, who assured the Regional Liquidity Fund would be sufficient for the task. “What Catalonia has said and what Valencia said today came as no surprise.”

Speaking after a meeting with French President François Hollande, the prime minister said he understood the “discontent” of Spaniards over the government’s austerity drive and promised his administration’s efforts would now concentrate on “growth and creating jobs.”

On the possibility of a second European rescue, both the French and Spanish leader backed the decision to wait until Brussels lays out the conditions that will be attached to a further injection of funds and the European Central Bank’s capacity to buy up debt in the secondary market is known. Rajoy also expressly denied electoral motives in delaying his decision, describing such accusations as those of “malevolent minds.” However, the prime minister did not rule out further cutbacks in next year’s budget: “I hope I won’t have to take such difficult decisions,” he said.

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