Spain’s new leader Mariano Rajoy yesterday named a team to steer the country out of crisis, with a former manager of ruined bank Lehman Brothers in the key economy minister job.
Mr Rajoy named Luis de Guindos, 51, to the crucial post to spearhead urgent reforms aimed at getting Spain’s five million unemployed back to work and reassuring investors about its public finances.
Mr De Guindos has solid political credentials with the ruling Popular Party, having worked in the economy ministry and rising to become state secretary for the economy from 2002-2004.
Turning to the private sector, he became executive chairman for Spain and Portugal of Lehman Brothers from 2006 until its collapse in 2008, which heralded the start of the worst of the global financial crisis.
The bearded Rajoy, 56, took the oath of office yesterday morning, a month after voters confronted by a worsening economy ousted the governing Socialists in an early election.
With unemployment at 21.5 per cent and warnings of a fresh recession looming, Mr Rajoy has vowed to pass immediate budget reforms.
He has promised to deepen the spending cuts that have already hit hospitals and schools in some regions and have brought thousands on to the streets in protest in recent months.
After his televised swearing-in by King Juan Carlos, Rajoy arrived for work, briefcase in hand, at the prime ministerial residence in western Madrid where he announced the names of the new ministers.
Among the 13 appointments, he named José Manuel Garcia Margallo, 67, a member of the European Parliament, as foreign minister and Jorge Fernandez Diaz, 61, who has held several junior government posts, as interior minister.
The European credentials of Mr Margallo and another new appointment, agriculture minister Miguel Arias, who was a longstanding European deputy, suggested a desire to engage in Europe’s efforts to reform and stabilise an economy beset by a massive debt overhang in many member states.
The new Cabinet was due to be sworn in today and hold its first meeting tomorrow.
Mr Rajoy’s warnings of austerity did not stop the Popular Party winning the November 20 general elections and seizing control of the 350-seat Congress, which on Tuesday voted by a majority of 187 to install him as premier.
“I know that things are going to be difficult, but I am keen, I have hope and determination to take Spain forward,” he said ahead of his investiture.
He said he would slash Spain’s deficit by €16.5 billion in 2012, through sweeping cuts, with only pensions escaping the knife.
Mr Rajoy has vowed to stick to Spain’s targets to cut the deficit to 4.4 per cent of gross domestic product in 2012 and 3.0 per cent – the EU limit – in 2013.
He acknowledged this week that the country may miss its deficit target of 6.0 per cent for this year and warned that if the figure reaches 7.0 per cent, the government will have to make a further €10 billion in cuts.
As well as Spain’s budget deficit, he must also solve its huge unemployment problem and has vowed to clean up its banks. Mr De Guindos favours the creation of a “bad bank,” a state-run structure that would pool the bad property assets weighing down banks since the 2008 housing bubble collapse.
“Rajoy has sent a clear and transparent message: austerity and reforms to defend ourselves within the euro,” Mr de Guindos declared at an economic seminar in Madrid last month.