Spain’s new economic stimulus measures are in part an attempt to address soaring unemployment there.
The jobless total, at 17.4 percent, is the highest in the European Union. Trying to stem layoffs, Prime Minister Zapatero plans to reduce business taxes for small firms that do not lay off employees this year or that increase their workforce. Tax breaks on house purchases will be phased out for all but low earners in two years time; that is to encourage people to buy now. There are around 600,000 unsold homes in Spain. To stimulate car sales, a 2,000 euro subsidy is being proposed for each new car purchase – 500 euros from central government, 500 from regional governments and 1,000 from the manufacturers. A 20 billion euro sustainable economy fund will be set up. State and private credit will be available for loans on projects focused on renewable energy, technology and infrastructure. The idea is to shift resources from construction into areas like renewable energy. The Madrid government also plans to provide an additional 600 million euros for a subsidy scheme to boost the tourism industry.