Prime Minister Mariano Rajoy
pledged on Wednesday to pull Spain out of its painful recession without
relaxing his drive to cut the country's high public deficit.
He struck a difficult balance
that may please neither voters, who are fed up with austerity, not Spain's
European partners, who did not get from him the new reform agenda they have
been seeking.
In his first state-of-the-nation
speech since taking office in December 2011, Rajoy said the deficit had dropped
below 7 percent of gross domestic product last year, still above the European
Union's short-term target.
He also announced new incentives
for employers to hire young people - youth unemployment is 56 percent - and cut
taxes for small- and medium-sized companies.
At the same time, he told
parliament he would remain strict on deficit cutting while implementing tough
reforms to the labor market, financial system and public finances.
But he fell short of meeting
demands from the EU and European Central Bank to lay out an ambitious
legislative plan of further structural reforms to the economy.
Rather than beginning his speech
to parliament with a list of accomplishments, Rajoy went straight to the heart
of the country's deep economic crisis, recognizing the human suffering caused
by a 26 percent unemployment rate.
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