January 14, 2020 / 12:32 PM / 5 days ago

Spanish PM hopes to meet Catalan leader, Madrid to negotiate deficit targets

MADRID (Reuters) - Spanish Prime Minister Pedro Sanchez said on Tuesday he wanted to meet Catalonia’s pro-independence regional leader “as soon as possible”.

Spain's Prime Minister Pedro Sanchez gestures at a news conference after the first cabinet meeting at the Moncloa Palace in Madrid, Spain, January 14, 2020. REUTERS/Jon Nazca

He also hoped Madrid would start negotiations soon with the European Commission on easing its public deficit targets.

Speaking after the first meeting of Spain’s new government, he also said the coalition had approved a decree raising pensions by 0.9% this year in a bid to ensure retirees “do not lose purchasing power”.

The government estimated in a statement that the rise in pensions would amount to a cost of 1.41 billion euros in a one-off measure.

Sanchez was sworn in last Wednesday, ending months of political gridlock and economic uncertainty after two inconclusive elections in 2019. Days later he announced a government lineup including ministers from the left-wing Unidas Podemos, who will now meet regularly on Tuesdays for cabinet meetings.

Sanchez said efforts to arrange a meeting with Quim Torra, the leader of the Catalonia region, were already under way but a date for a meeting had not yet been set.

The Catalan separatist party ERC was instrumental in enabling Sanchez to win a confirmation vote in parliament last week, although Torra is not a member of the ERC, and Sanchez has said he will seek to resolve the Catalan dispute through dialogue.

The separatist movement in the northeastern region spiraled into political crisis after leaders defied Spanish courts to hold a 2017 referendum on independence. Nine leaders were later sentenced to up to 13 years in prison over their role in the failed independence bid.

Lacking a majority in parliament, Sanchez’s government must now forge consensus among a shaky patchwork of alliances to pass laws.

Spain lowered its growth forecasts late last year due to domestic and external factors such as trade tensions and raised its deficit estimate.

Sanchez said his government would aim to negotiate with the EU Commission to potentially relax public deficit targets, currently approved by Spain’s parliament at 0.5% for 2020.

“The economic conditions have changed for some time now, so this is a negotiation process that we will have to open with the European Commission ... and we will start that negotiation as soon as possible,” Sanchez said without giving further details.

The head of Spanish Treasury, Carlos San Basilio, said Spain would seek targets that would balance competitiveness with enabling growth. “The commission has been flexible in the recent years, you don’t just come up with one magic number,” he said at an event in Madrid.

Sanchez said his government would also carry out its promise of raising Spain’s mininum wage to 60% of the average wage of 23,646 euros per year, but said the measure would take time.

“We’ve just started and we have many weeks ahead of us,” Sanchez told reporters.

(This story removes extraneous words from 13th paragraph)

Reporting by Belen Carreno, Inti Landauro, Jose Elías Rodríguez and Clara-Laeila Laudette, writing by Ashifa Kassam and Andrei Khalip; editing by Timothy Heritage

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