Spain: pain remains as OECD warns recovery is a distant prospect

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Spain: pain remains as OECD warns recovery is a distant prospect

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The chance of a quick economic recovery in Spain is still a distant prospect and “decisive action” is needed if the economic and financial situation is to be remedied, according to the Organisation for Economic Cooperation and Development.

One of those “decisive measures” is a change in the labour laws. Ángel Gurría is the OECD general secretary:

“We don’t want to erode the rights of workers, we don’t want to take away the rights already earned, but we do want to create a situation of open employment in Spain.”

The Spanish economy has contracted 1.3 per cent this year, unemployment is running at 25 per cent with a deficit of 8.1 per cent.

Moves are already afoot to restructure the banking industry with 37 billion euros of bailout money in exchange for job cuts and branch closures. Spanish Finance Minister Luis de Guindos said:

“We need to engage in a process of budgetary consolidation, significant restructuring and recapitalisation. We also believe that in the coming months and quarters we will have a financial sector that will be able to serve the people and the wider economy.”

The OECD warned that more austerity in Spain will only add to the problems and urged the government to help young people back into work as youth unemployment is running at a crippling 50 per cent plus.