Prime Minister Zapatero announces new laws to combat recession

During a Control Session in Parliament the Prime Minister, Jose Luis Rodriguez Zapatero, announced a series of measures aimed at helping companies to ride out the current economic downturn.

Most significantly for Pymes (companies recognised as small businesses) the company tax has been altered, meaning that the threshold above which the reduced company tax is levied has been raised from 120,000€ to 300,000€. It has been estimated that this very significant change will have a beneficial effect on approximately 40,000 companies who might otherwise be vulnerable to the deleterious effects of the prevailing financial climate.

In a further move the quota charged for membership of Chambers of Commerce will also be eliminated, permitting smaller businesses to save on networking costs.

New rules affecting employment agencies should also encourage the creation of jobs within the service sector, while Finance Minister, Elena Salgado, will announce changes in the law surrounding the regulation of autonomos (the self-employed) at a later date.

Stimulating growth

The six months of extra payments (of 426€ per month) previously paid to the unemployed whose benefits have expired will be stopped in February 2011. While some political commentators have predicted protests, others have welcomed the move, stating that Prime Minister Zapatero’s economic thinking is sound and that ultimately transfering resources from the unemployed to small businesses will lead to job creation.

It is also predicted that many more individuals will be tempted by these new laws to set up and run their own businesses, making Spanish workers less reliant on the wellbeing of large corporations, many of whom have been forced by the current economic situation to lay off staff or to cancel plans to increase their workforce.

Prime Minister Zapatero also announced that 30 per cent of Spain’s state lotteries will be privatised, along with 49 per cent of AENA, the Spanish airports authority. Tenders are welcomed for the private management of both Madrid’s Barajas and Barcelona’s El Prat airports.

With so much attention being focused on Ireland’s financial woes, it is hoped that these fundamental changes in philosophy will begin to revive growth and result in increased job creation by helping smaller businesses to improve their competitive position.

It is an about-face that hasn’t come a moment too soon, but is significant in its implications as an important ideological shift towards a labour market and economy that is competitive and robust.

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