Ahead of his inauguration today, Spain's new prime minister, Mariano Rajoy, told parliament that he does not expect to be popular because the measures he has to take to reduce public spending by at least 16.5 bn Euros will be harsh.
The only people who will see rises are pensioners, all other areas of public spending will face cuts. Rajoy was not specific about exactly where these cuts would come or the extent of them.
He went on to say that he will force the countries banks to own up to the scale of losses they have on bad property loans. They will be required to reveal the full extent of their toxic debt at realistic prices. They would then be encouraged to sell off their property portfolios which of course would flood the market with more cheap housing driving prices down even further.
He also mentioned the notion of a “bad bank” which would soak up the debt but was not specific about how this would work. He also proposed a major reform of the financial sector with a second wave of mergers to maintain solvency.
Unions and employers will have to agree on labour reforms that will make collective bargaining more flexible and reduce the cost of hiring and firing. The “bridging”* of holidays will largely go and there will be measures taken to reduce absenteeism. People will be encouraged to work for longer thus reducing the pension bill.
There will be 3,000 Euros of aid given to companies prepared to offer young people their first job and rebates on social security payments for them.
He also promised reforms of the education system which would mean that all schools would be required to teach both Spanish and English and the Bachillerato will be for three years.
* In cases where there are two public holidays separated by a work day, the holiday is bridged giving workers three days.