All government measures and all actions taken by economic policymakers and agents should be aimed at restoring the confidence we have lost. And one of the pre-requisites for doing so and for dispelling all uncertainty is that Spain should bring its public finances back on to a path of stability in line with its European commitments. I believe there is a sizeable consensus that Spain needs to redress its fiscal imbalance and move towards a path of stability, in line with its European undertakings, and that this is a pre-requisite for restoring confidence and dispelling uncertainty. Consolidation measures have been tabled that are capable of bringing about this change of direction in budgetary dynamics. And, above all, the national budgetary framework has been substantially reinforced in order to allow the coordination, monitoring, surveillance and, where appropriate, correction of deviations by the different tiers of government, which we were previously lacking and which is vital to achieve the fiscal targets set. The authorities at all levels of government have taken a significant first step in ratifying these targets and agreeing on their contribution to the consolidation drive that must be undertaken in the coming months. Now it is of the essence to restore credibility with a rigorous budgetary outturn, transparent management and, when necessary, corrective measures that shore up the fiscal targets set. That will attest to the strength of the commitment to the budgetary stability enshrined in the new Organic Law.

This is in light of the composition activity is likely to evidence, given the sizeable weight of exports and the weakness of private consumption and the real estate market, which may lead to lower revenue than the course of output might suggest, as was the case in 2011. The foreseeable decline in employment also appears to suggest Social Security contributions will be more modest than budgeted. Finally, there is substantial uncertainty surrounding projected revenue takings in respect of the special treatment accorded to undisclosed income. Turning to expenditure, the draft Budget outlines highly significant cuts in public investment, current transfers and goods and services purchases. These projections are not without risk, given the substantial inertia some of these items show, which hinders any permanent change in their trajectory. Precisely to reinforce this trajectory, the government added further education and health-care measures following the presentation of the draft Budget, which should contribute to attaining the targets set. That said, overspending on items such as unemployment benefits or pensions cannot be ruled out, since they depend on factors beyond the control of the authorities, such as the unemployment rate, demographics and inflation. Given these risks, the Budget must be rigorously implemented and mechanisms activated to enable any emerging deviations to be detected sufficiently in advance, so that additional countervailing measures may be taken. If this were necessary, measures to contain current expenditure or to increase indirect taxes could be adopted, as already contemplated in the Stability Programme ahead of 2013.