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Why Spain is new euro zone poster child

Tuesday, September 30, 2014 - 02:11

Spain is being hailed the new poster boy for the euro zone. As it outlines its 2015 budget, Sonia Legg looks at the progress Spain's made compared to France and Italy.

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A way out of the economic crisis - that's how Spain has billed it's 2015 budget. Cristobal Montoro is Treasury Minister. (SOUNDBITE) (Spanish) CRISTOBAL MONTORO, SPAIN'S TREASURY MINISTER, SAYING: "This is a budget plan for consolidation, economic recovery, job creation, and an attempt to give back to the Spanish society what they have contributed to make this recovery possible. The plan contains tax cuts for individuals, companies and, more importantly, families." Spain's endured a banking crisis, soaring unemployment and a prolonged property slump. But it's emerged from deep recession and has this year been one of the euro zone's best performing economies. De Vere Group's Tom Elliott says others should take note. (SOUNDBITE) (English) INTERNATIONAL INVESTMENT STRATEGIST AT DE VERE GROUP, TOM ELLIOTT, SAYING: "Spain is now the poster child after Ireland in reform. They have engaged in structural reform, wages have fallen in nominal as well as real terms, house prices have begun to move up in Spain so in a way I think the message to Paris and Rome is look to Madrid and see what they did and see if you can instigate some of those reforms yourself." Rising exports have helped Spain. But it's still got a debt ratio which will top 100% of its economic output by next year. (SOUNDBITE) (Spanish) CRISTOBAL MONTORO, SPAIN'S TREASURY MINISTER, SAYING: "The more we use gains from economic growth to reduce the public deficit, the sooner we will exit the crisis. That is already happening." Spain's centre-right government has taken some painful decisions over the past two years. At one point is was on the verge of needing a bailout. - in fact its banks took one. But borrowing costs are now around 10 year lows. Many in France and Italy won't like the idea of Spain being a shining example - unemployment for starters remains second only to Greece with one in four out of work. But the focus on austerity - yet to be fully embraced by its two key neighbours - does seem to be paying dividends. Spain's just raised its economic growth outlook for 2014 to 1.3 percent. And it expects GDP to grow by 2% next year - that's a rate stagnant France can only dream of.

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Why Spain is new euro zone poster child

Tuesday, September 30, 2014 - 02:11