• Market excess not only factor to blame in euro zone crisis, structural problems too
• Spain was vulnerable due to disfunctions in labour market
• Spain needed profound labour market reform
• Recovery in market confidence on Spain became the main objective
• Recently passed law on saving banks will allow stability in cajas
• Austerity measures gave credibility to deficit reduction aims
• Spain’s reforms and measures have led to tensions in market being diminished
• Maintaining that credibility is key given tensions remaining in other euro zone countries
• Timid recovery will continue next year, but lots of uncertainty internally and externally
• Conditions of financing are still restrictive
• Hard for internal demand to recover as well in 2nd half of this year as in 1st half
• Internal demand will continue to show weakness
• External demand will be more dynamic than internal
• Exports will prolong rising trend
• Outlook for Spain’s economy shows gradual improvement, but will take a while to generate job growth
• Control of deficit is major priority
• There are risks that threaten the 2011 budget deficit goals
• Biggest risk for deficit reduction comes from territorial administrations. Decentralization of spending in regions
• Regional govts must commit to cut spending
• Pension reform key to reinforcing country’s credibility on budget discipline
• Fiscal consolidation will be more effective if it goes along with structural reforms