Bank of Spain endorses ruling party as poll looms
Mr Linde, who is also a member of the ECB Governing Council, told the Spanish parliament in Madrid yesterday that changes to labour-market rules introduced by prime minister Mariano Rajoy have boosted the pace of job creation and that maintaining the government’s fiscal policies is crucial for economic growth.
“Doubts over whether the efforts in macroeconomic, fiscal and financial rebalancing will continue could put an end to or reverse the progress made,” Mr Linde said.
He said the economy could grow more than 3% this year and next with the right policy mix. Mr Rajoy, who nominated Mr Linde to head the central bank in 2012, is fighting to rebuild his support before an election due around the end of the year.
The state pollster CIS put support for Mr Rajoy’s People’s Party at 28% last month. While the party extended its lead over the Socialists, Mr Rajoy is down from 45% he won in 2011.
The government has been hurt by the austerity measures Mr Rajoy was forced to implement in return for a EU bailout of the country’s banking system, as well as a raft of corruption allegations against the prime minister and his party.
Rajoy has denied any wrongdoing.
Mr Linde was criticised by opposition lawmakers and a Bank of Spain board member after defending Mr Rajoy’s budget policy in April, calling it “common sense” and “patriotism” rather austerity.
While conceding that the term patriotism may have been inappropriate, he described the reaction to his remarks as “a bit exaggerated.”
“For years the Bank of Spain has systematically supported the economic policies of the government. Given the economic situation in Spain, you’d think there’d be some room for criticism, but no.
“Whether it’s today of the comments on patriotism, it’s the government’s narrative,” said Alberto Garzon, leader of the United Left party.
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