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Leading employer group backs further austerity

CEOE's Rosell says cutting spending is "common sense"

Juan Rosell, the chairman of the Spanish Confederation of Business Organizations (CEOE), on Wednesday backed moves by the country's regions to cut spending in order to rein in their deficits.

Artur Mas, the premier of Catalonia, on Tuesday announced plans to cut public sector wages, raise taxes and introduce a co-payment system for social services. Castilla-La Mancha and Galicia have also embarked on austerity drives.

"It's common sense," Rosell said at a seminar in Madrid. "You have to do what you have to do." The CEOE chief said public spending in Spain had not fallen by as much as tax receipts have; therefore, in order to rein in the public deficit, outlays have to be cut further rather taxes increased. "It's pure mathematics."

Rosell said while Spain was not "insolvent" it was "in danger," and urged the Popular Party government in waiting of Mariano Rajoy to also introduce more measures to restore the country's financial situation. But in the face of growing anxiety in the markets and among other European leaders, he defended Rajoy's right to remain silent until he had decided how best to do that.

Rajoy needs to establish without "getting it wrong" what the country's needs are in the immediate future and the medium term, he said.

Rosell called for further reforms in the labor market to address the problem of unemployment shooting up during times of crisis. He asked for severance payments to workers to be reduced to bring them in line with the rest of Europe, and for the red tape involved in laying off employees to be slashed. Spain's jobless rate is 21.5 percent, double the average in Europe.