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Spanish government's pre-election budget giveaway

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Spanish government's pre-election budget giveaway
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Spanish Prime Minister Mariano Rajoy has outlined his government’s budget for 2016.

The July timing of the announcement is significant in that it comes just a few months before parliamentary elections due in November, prompting some observers to call it a pre-election handout.

Rajoy said the programme would serve to strengthen growth and the recovery of the Spanish economy.

“Spain is entering a virtuous circle – more competitivity, more growth, more jobs, more investment, lower taxes, which in their turn, lead to more growth, more competitivity.”

Rajoy said public workers’ salaries would go up by one percent 2016, and pensions would increase by a quarter percent. And he pointed to what he considers evidence that his policies are working.

“Over the last 12 months, 56 percent of those who have come off unemployment in all of Europe are Spanish”, said the prime minister.

The recent regional elections saw many voters abandon the traditional two largest parties in favour of anti-austerity newcomers like Podemos.

It’s those disenchanted voters that Rajoy will be hoping to win back with his budget of pledges and giveaways. But as he pointed out in his speech. He can only honour them if his PP party wins the election.

Spain’s economy is growing at its fastest rate since 2007, but unemployment still stands at 22.4 percent, beaten only by Greece.

Amongst the under-25s the figure rises to 50 percent.

The country also has high levels of public and corporate debt that are limiting an investment revival.

The economy may be heading in the right direction but there is still a long way to go.