Spain may take EC ruling on shipyards aid to court

The Spanish government is considering taking legal action against the European Commission's decision to order the state to recover tax breaks granted to financers of the country's shipbuilding industry, Labor Minister Fátima Báñez said Thursday.

"We do not rule out starting legal action," Báñez said in Moscow, where she was attending a meeting of G20 labor ministers. "We are analyzing the Commission's decision and we are not ruling out taking legal action to defend Spain's position."

She said the administration of Prime Minister Mariano Rajoy would "fight to the end" to safeguard the some 85,000 jobs generated by Spain's shipbuilding industry.

EC vice president and its commissioner for competition, Joaquín Almunia, on Wednesday ordered Spain to return the tax relief afforded to financial intermediaries that had funded the construction of vessels in the period 2007-2011.

Sources in the sector estimate that since 2002, Spain had granted tax breaks of some 2.8 billion euros to the shipbuilding sector. There are fears that removal of the fiscal incentives could lead to some shipyards being closed.

Almunia argued that the tax breaks constituted illegal state aid. He dismissed Spain's argument that the legal status of such aid was not made clear before 2011. Madrid lobbied to have the period in which it had to be returned from that year onwards.

In response to a forecast earlier this week by the Organisation for Economic Cooperation and Development that Spain's unemployment rate would rise toward 28 percent next year, from an already record level of just over 27 percent in the first quarter of this year, Bañez pointed to the fact that jobless claims had fallen by 85,000 in the first half of 2013, which constituted the best performance of the labor market for this period of the year since 2006.

"We are working to create jobs, and I am sure we can beat the forecasts," she said.