Doubts about new convergence programme

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On 17 April 1997, the Spanish Parliament endorsed the new convergence programme released by the Government, the 1997-2000 Stability Plan. Employers and unions have expressed certain doubts about this programme: the employers' associations consider that it is feasible, but do not rule out the possibility that a severer adjustment will be necessary than expected; the trade unions suspect that the programme may involve cuts in social expenditure and have expressed their disagreement with the privatisation plan that accompanies it.

On 17 April, all political groups represented in Parliament, with the exception of the left-wing coalition IU, endorsed the 1997-2000 Stability Plan, the new convergence programme drawn up by the Government to meet the Maastricht criteria for EU Economic and Monetary Union (EMU). Having received parliamentary support, it will be submitted to the European Commission in May.

The 1997-2000 Stability Plan projects a rate of economic growth of 3.2%, average inflation of 2.3%, a reduction in the public deficit by 1.6% and the creation of a million jobs. The aim of the Plan is to allow Spain to be one of the countries using the single currency in 1999: the EMU criteria for inflation and interest rates will be fulfilled and the objectives for public deficit and public debt will be very close to being fulfilled. The Government has presented this programme as the starting point for a new model of growth, since for the first time economic growth will be higher than inflation and this will allow public expenditure to be contained without making cuts. The Plan thus provides for a slight lowering of fiscal pressure, a moderate increase in public investment and the maintenance of social expenditure.

Despite the wide parliamentary support that the plan has received, several political groups have expressed their scepticism about this approach, which they consider to be excessively optimistic. This scepticism is also evident in the positions of the social partners, though it has been tempered by the good progress of the economy and the climate of social consensus behind the draft agreement on labour reform (ES9704207N).

The employers' organisation, CEOE, considers the plan to be perfectly feasible, but stresses that it is particularly important to monitor strictly the implementation of the budget and to take measures to correct deviations and contain expenditure. In short, the employers believe that stricter measures to adjust expenditure may be necessary. This position is shared by some political groups.

The trade unions, UGT and CC.OO, have expressed their scepticism about what has been called "the impossible equation": lowering fiscal pressure, increasing public investment and maintaining social expenditure. They consider that the rate of economic growth forecast will not be sufficient to guarantee this programme, so it cannot be ruled out that sooner or later the Government will be forced to cut social expenditure in order to meet the objectives. The trade unions have been opposed to this since the signing of the Maastricht Treaty on European Union. They have also expressed their disagreement with the privatisation policy - they feel that it is a mistake for the Government to push forward with privatisation in order to obtain an additional source of income and balance public finance in the short term. This policy would involve losing control of strategic sectors and threatening some public services.