Merkel praises Spain for action on economy
German Chancellor Angela Merkel yesterday praised Spain's recent moves to shore up its finances and avoid a bailout package like those taken by Greece and Ireland, suggesting that the risk is low for Europe's fourth largest economy to be forced into accepting a rescue package.
Ms Merkel said Spain took great strides forward by raising the retirement age from 65 to 67 for most workers last week and by bringing government, unions and business leaders together in a united front this week with a pact with reforms aimed at boosting its fragile economy at the heart of Europe's debt crisis.
"Spain has really done its homework and I think it is on the right track," Ms Merkel said after meeting for hours with Spanish prime minister Jose Luis Rodriguez Zapatero.
The latest reforms, which come on the heels of a host of other austerity measures imposed by the government, help "change the direction of Spain", she said. Spain in recent weeks has also taken steps to force savings banks bulging with property loans gone bad to boost their financial viability.
Investors have cheered the new government measures, sending Spanish stocks higher in recent weeks and lowering the cost for the government to issue debt.
But the government also announced this week that the number of people in Spain filing claims for unemployment benefits rose to a record 4.23 million last month as the country struggles to overcome recession.
The government said last week the unemployment rate said it had surpassed 20pc after a slight dip in the third quarter of 2010 and now stands at 20.3pc, a eurozone high.
Mr Zapatero added: "We must become more competitive, and reforms are needed."