Prime Minister's Office of Spain : Press conference by President of the Government

President of the Government.- A very good day to you all and thank you for attending this press conference.

As you are all aware, the main objective of my appearance today before all of you is to take stock of how this year, 2013, has gone and, at the same time, outline some ideas for the future.

At any event, as you are also aware, today we have had a Council of Ministers and some important decisions have been taken, above all in relation to the electricity issue. So, if you don't mind, I will start with an initial section to explain how the government sees the current situation of the Spanish economy at this time, and then, we can… I will do that directly and then if any of you are interested in asking me about the situation of the electricity system or about any other matter that you consider important.

As I have just said, I appear here before all of you, as is habitual following the last Council of Ministers of the year, to take stock of what this year, 2013, which is about to finish, and summarise what it has meant for the government.

I would like to start this speech by expressly acknowledging the attitude of the people of Spain towards a year that has been difficult, but which I believe has now started to show the first results of so much effort.

I would like to thank everyone: workers, the self-employed, public officials and civil servants, business owners, pensioners… in short, all Spanish people, for their comprehension, their common sense, their courage and their responsibility in tackling the end of this period that has been so tough, so long and so difficult, because, if 2012 was the year of adjustments, 2013 has been the year of reforms and 2014 will be year of the start of economic recovery in our country.

2013 is now drawing to a close and it is doing so with a noteworthy correction in the imbalances of our economy. In other words, we are closing the year with much sounder foundations for economic recovery. We have left behind the recession and in the second half of the year, albeit modestly, the Spanish economy has recovered growth and, hence, we are in a position to assert that we have helped towards a clear change in the situation.

We have continued to make progress in controlling the public accounts, adjusting our expenditure more to our revenue. All the public administration services have collaborated in this task which is neither pleasant nor easy, but it was and remains absolutely essential. The hardest effort has now been made, but we can't drop our guard in this matter, because it would mean wasting the enormous effort made to date.

On this point, I feel it necessary to mention the liquidity mechanisms - the autonomous liquidity fund (Spanish acronym: FLA) and the Supplier Payment Plan - which we implemented to help out the regional governments and local authorities to cover their financing needs and to help them meet their commitments to suppliers. These measures amount to more than 105 billion euros but have helped to avoid the loss of 400,000 jobs in 2012 and 2013 and a fall of three points of GDP in our country, as well as, logically, the bankruptcy of many public institutions.

From another point of view, we are recording historic growth figures in our exports. The latest data publish in relation to October point to average growth in excess of 6%. The strength of our exports, achieved based on gaining in competitiveness, now represents 35% of our GDP. I trust that the economic recovery of Europe - our main customer - will allow us to strengthen our foreign trade sector.

At the same time as our companies are looking overseas to sell their products, there has also been extraordinary growth this year in foreign investment in Spain, which is another very positive fact. The latest data on productive investment, in relation to the third quarter of 2013, show a level of recovery of 76% in year-on-year terms.

Hence, the correction of these imbalances is improving the perception of our country in all the international markets. Recently, the three ratings agencies have raised our credit rating; added to which the risk premium, which now stands below 230 basis points, has dropped drastically compared with the level it soared to at the most difficult point of the debt crisis.

Ladies and gentlemen, a year ago, at a press conference just like today's - also held here - there were still some of you who were asking me, and I remember this perfectly, about the possibility of Spain needing a bailout. That question is no longer pertinent, because Spain has managed to restore the credibility that it had lost in the financial markets.

I accept that these are macro-economic figures and that they still haven't filtered down to the day-to-day needs of the people of Spain, but, at any event, they have significant consequences.

- If inflation ends up rising by only a few tenths of a point, something that has not happened practically ever in Spain in a great many years, that is good. It is good for everyone, but particularly for those pensioners who have not seen their purchasing power diminished this year.

- If the risk premium falls and we can obtain financing more cheaply, as has happened this year, we can free up resources which, instead of being used to service debt, can be spent on other social items. The saving made this year - this was mentioned today by the corresponding minister at the Council of Ministers - thanks to the drop in the risk premium, has amounted to 8.7 billion euros.

- If the competitiveness of our economy improves, as it has been, to recover the levels it was at when we joined the Euro, we can improve our exports, sell more overseas and also receive more investments in Spain. And that is exactly what is happening in Spain.

Ladies and gentlemen, all of this is true. It is true that the foundations are being laid for recovery, but it is no less true that as regards the main objective of this legislature - to grow and create jobs - we are still very far from reaching the levels we seek. Hence, I cannot feel satisfied with the situation, in fact far from it.

This year we have come out of recession and in the second half of the year we are enjoying growth.

As regards employment, I hope that, when 2013 ends, the number of unemployed recorded in the registers of the public employment services will be less than last year. That has not happened in Spain since 2006. The Social Security figures, which are also good, allow us to speculate that in just a few months time the number of contributors will start to grow progressively.

I also want to highlight that this change in trend in our economy would not have been possible without the raft of measures and reforms that we have undertaken during the course of this year, and which - I am unaware as to whether you have been handed them yet- I will make a very brief summary of what I consider to be most relevant, because the structural reform plan that has been implemented has certainly not been a merely cosmetic, but rather something far-reaching, going to the heart of the matter of just what the economy of a country is.

- The reform of the financial system has been completed and measures have been approved to improve solvency and corporate governance. As you are aware, in just a few days we will definitively abandon the financial assistance programme negotiated with the European Union.

- Similarly, we have just approved new measures to improve the labour reform which, by the way, has received a very positive evaluation from the OECD.

- The Law to Improve Education Quality has been approved, and the local authority reform and the Law to Control the Trade Debt of the Public Sector have been approved.

- We have also finalised the reform of the pension system, which includes the sustainability factor and a new system for its revaluation.

- The reform of the electricity sector, which has closed the deficit for 2014. Furthermore, as you are aware, and I mentioned this at the start of my speech, the government has had to react to the report issued by the National Markets and Competition Commission on the latest auction.

- Also the Law to Guarantee Market Unity, the Law to Support Entrepreneurs and other reforms on matters of the environment and transportation.

- And I want to make special mention the reform of the public administration services, which is an extremely complex project that no government has dared to tackle in the past and which, in a cross-disciplinary manner, will inspire the actions taken by my government until the end of this legislature.

Furthermore, during the course of this year we have approved a raft of initiatives to improve the transparency and control of public life: the Law on Transparency, the Law to Control the Economic and Financial Activity of Political Parties and the Law Regulating the Exercise of Public Office. These reforms will shortly be completed with other modifications that will be included in the reform of the Criminal Code and the Law on Civil Procedure.

Ladies and gentlemen, one year ago I said to you here that this year, 2013, was going to be very tough, particularly in the first half, in the first six months, but I also said to you that things would start to improve in the second half of the year. Well, events have proved us to be right. With this guarantee, I can say to you that 2014 will be a much better year, with greater activity and more growth in the economy. And next year, when I appear here before you again, there will be fewer unemployed in Spain and more people in work, contributing to the Social Security system.

With the same certainty and confidence as I said to you a year ago that things were going to improve, I say to you now that we have a well-founded right to hope and, I can honestly say that next year will be better than this year; a year in which we will definitively leave fears and uncertainties behind and will recover the appreciated commodity of confidence.

The challenge is for this recovery to be as strong as possible. We are working for that to be the case and, among other measures, the government is already preparing the tax reform that will principally be designed to alleviate the tax burden on families and stimulate economic activity.

Ladies and gentlemen, I don't want to finish without mentioning the attempt to call a referendum on the self-determination of Catalonia. As regards this matter, I reiterate my position: this referendum is in violation of our Constitution, and hence cannot be held.

That which some people intend, but will not achieve, would enormously damage the whole of Spain, but particularly Catalonia. That is why I say that I will work tirelessly to defend a model of coexistence that has given all of us the greatest period of stability, democratic development and social well-being in the history Spain.

I will devote all my efforts to avoiding that both the Catalan people and the rest of the people of Spain are prejudiced by a political initiative that has only managed to generate uncertainty, instability and social division.

I will finish now. We are halfway through our term of office. In barely two years, we have managed to check the fall of our economy and lay solid foundations for future growth. Spain has ceased to be a cause for concern around the world and has become a source of interest and attraction for investment.

Today I would like to encourage everyone to think back a little and you will see that the worst is now behind us. You will even realise just how difficult it has been to operate in such a tough period. But we did what we had to do and what we did was necessary. The plan we designed to avoid collapse, to avoid a bailout and recover confidence as the preliminary steps to recovery has been borne out during the course of the year.

Undoubtedly we still have serious problems that will require us to persevere along the path of reforms. The worst is now behind us, but there is still a long way to go to reach the goal we set. We will not falter now that we have started to enjoy the fruit of so much hard work.

This government will not lack the impetus and I am absolutely convinced that neither will the Spanish people. Thank you very much.

Q.- Mr President of the Government, you said that you were going to explain the changes in the electricity system. They are talking to us of a rise in the electricity bill of some 3%, which is what they are saying. At a time when pensions - you yourself said that inflation is virtually at a standstill - will rise by 0.25% and the minimum wage will be frozen, I wanted to ask you why electricity has to rise and how this problem has been resolved.

As regards the issue of abortion, I wanted to ask you for the fundamental reason why Spanish Law cannot accept abortion in the same way as other legal systems, such as in Germany, France, Italy and the United Kingdom do. I don't know if you have read the European press in the last few days; only Le Pen supports you. I would like your comments on this matter.

Finally, this is the second time in Spain's history that a party in power - the last time was with Filesa - was searched by the police for so many hours. I wanted to know if someone is going to take responsibility for not having collaborated with the justice system, as the judge's writ states.

President of the Government.- Among the most difficult issues we have had to tackle during the course of this term, possibly the most complicated is that of the electricity sector due to the different decisions that were adopted in the past, which I am not going to repeat here because I don't want to bore you. What I do want to say to you is that, when we came to power, there was a deficit, which, like all debts, had to be paid, amounting to 27 billion euros and, moreover, if we hadn't done anything, this deficit would have kept rising, because it was going to rise by 10 billion euros more per year.

We have had to take some very important decisions, and I should say to all of you that they weren't easy, and we have reformed all the regulated activities in the electricity sector: transmission, distribution, renewable energy subsidies, the non-mainland situation, coal payments, interruptibility... It hasn't been easy but we have achieved something important in now having an electricity sector that has done away with a deficit which, if it hadn't been paid off, would have led our system to bankruptcy, beyond a shadow of a doubt.

Hence, all the regulated activities of the sector are now regulated, although it is clear that there are certain things that are still outstanding; then there is the second part which is the liberalisation, the auction that has taken place and which has generated the controversy we have seen over the last few days. The National Markets and Competition Commission has stated that it did not agree with the results of the auction, it urged the government to take decisions, and the government has done precisely that, it has taken decisions.

We have approved a Royal Decree-Law with a temporary mechanism to set electricity prices solely for the first quarter of 2014. This Royal Decree-Law establishes a price rise in electricity for the first quarter of 1.4%. And you are already aware that the bracket which the National Markets and Competition Commission referred to was between 1.4% and 2.9%. And today we also decided to submit to the National Markets and Competition Commission the Ministerial Order increasing the tariff element for the first quarter by 0.9%. What is the main objective? It is to definitively pay off the tariff deficit.

As a result of these two increases, the electricity bill in the first quarter will be 2.3%, while the result of the auction clearly exceeded 11%. Hence, the electricity bill will only rise by 2.3% instead of by 11%.

I would like to say that this temporary mechanism will only be applicable in the first quarter of 2014 and will be replaced in the second quarter by a definitive auction mechanism in line with the proposal from the National Markets and Competition Commission, which is being worked on by the Ministry of Industry, Energy and Tourism.

At the same time, the Ministry of Industry, Energy and Tourism is working on the reform of the structure of the electricity market to introduce greater competition into its operations.

In short, resolving the problems of the electricity sector was never going to be and is still not an easy matter. We have resolved the regulated part and we have tackled the tariff deficit, which could have put the system at risk of bankruptcy; the objective now is to make structural reforms that definitively complete the raft of reforms of the electricity sector. I believe that this effort, and I hope that this is achieved by the end of this legislature, seeks to ensure that the price of energy in Spain is a price that is comparable with the vast majority of our peer countries, since energy, apart from being paid for by our citizens, is a fundamental element of the competitiveness of our country.

As regards the regulation of the law you referred to, as the minister already explained in her latest speech, it is a law that regulates this situation in a balanced manner, it is a law in line with what was approved in 1985, and which remained in force until 2009 and which, then, without being announced in any election manifesto by anybody, was modified in 2010. Hence, I repeat, it is in line with the provisions in force in Spain for many years and which was not modified by us when we came to power in 1996.

And the last question about the search of our headquarters. The Partido Popular will always collaborate with the justice system; it will always respect the decisions of the courts and it will make, as I have announced and as we approved recently, all the legal amendments necessary to prevent undesired situations in our country.

Q.- Mr President of the Government, after the King, in his Christmas speech, called on the political parties for dialogue, and even, to make reforms to modernise the rules for coexistence, I would like to know if you are now prepared to start to at least seek this possibility for consensus to change the Constitution.

In addition, since the Minister for Justice announced that the Abortion Bill will not be changed one iota in its passage through Parliament, I would like to ask why it has not simply been approved by a royal decree-law.

President of the Government.- There are things that simply cannot be passed by a decree-law. You should know that.

As regards the first part of your question I would like to make a reflection on… As regards the King's speech, I want to say that I paid close attention to it. I listened to its, moreover, in Pontevedra; I was there, in my home town on Christmas Eve. I thought it was a wonderful speech, spot on in everything he said.

I would like to make a reflection on constitutional changes and on all those changes that many people are talking about. The most important constitutional change that is taking place in Spain, and it would seem we haven't even realised that, is Europe. Just look at the change brought about by the existence of Banking Union; the change brought about by the Bank of Spain ceasing to supervise Spanish banks and the fact that this will now be done from Frankfurt; or the change brought about by a Single Resolution Mechanism - something similar, because it's not quite the same - to a European FROB and that the Spanish FROB will no longer exist. In other words, a first order constitutional change is truly taking place there, in Europe.

Just look at the Fiscal Compact and just look at the contractual agreements and decisions that are being taken. The Constitution is being changed there and there is total and utter agreement between the major political forces in this country, and I must say that I find that very reassuring.

As regards the rest, well listen, on essential matters the Constitutional Court has been renewed in both time and form, the General Council of the Judiciary has been renewed, for the first time in a long time, in both time and form; there is agreement on European issues; there is a common diagnosis as regards some of the issues I referred to in my speech, and then there are matters that form part of the different ways of seeing things which, on the other hand, is absolutely logical. We are not a society in which everyone thinks the same on every issue.

Hence, the call to speak out - and all these things - is being called into question, and I think that is great.

Q.- Mr President of the Government, you have made an extensive review, a sufficiently broad overview of the economic balance at the end of the year and, together with the outline of the situation at the end of the year compared with the end of last year, you have added a reference to the political situation in Catalonia. Firstly, I wanted to ask you whether this, let's say, narrative structure, corresponds to an evaluation that the problem in Catalonia equates in size to the problem of the economic crisis, since you have placed them on a par.

Secondly, since you have said that you will devote a significant part of your efforts in the coming year to dialogue with Catalan society, to address Catalan society, will this effort that you plan for 2014 have the sole message of "no", of no to the referendum, taking into account that this referendum, at this point in time, according to the latest polls published, specifically in the case of the newspaper "La Vanguardia" just a few days ago, has a consensus of around 73% of the sample consulted.

President of the Government.- As regards the first question, I understand that you have said that since the bulk of my speech referred to the economy and the only matter outside of the economy I introduced is the matter of Catalonia, that I am thus giving importance to the issue of Catalonia. Yes, I consider it important, of course I do. It would be irresponsible of me not to give it its due. I believe that the economy is presently a concern for many Spanish people and I believe that the situation that is taking place in Catalonia is of great concern for many Catalans and for many Spaniards who are not Catalans. Hence it is an important matter, it has importance and I give it its due importance.

Aside from that, regarding the message, the message of "no"… I say "yes" to many things. I say "yes to our common history, which we have all played a part in, which is the oldest common history in Europe, because this was the nation that first attained unity from among all nations in the European Union; I say "yes" to that. I say "yes" to our emotional ties, to our trade ties, to our personal ties; I also say "yes" to that. I say "yes" to the Spanish Constitution, that guarantees our rights and liberties, and that we have all voted on by a majority. I say "yes" to the more than 30 years that our Constitution has been in force, which has given rise to one of the greatest periods of progress in our history. I say "yes" to a country that in the last 50 years is the fifth ranked country in the world in terms of its per capita income increase, behind Japan, Ireland, and then Hong Kong and Singapore. The fifth country is Spain. I say "yes" to many things that we have done together and to many more things that we must do together in the future.

The main project now is the great European project and, if Europe wants to be great, which started by being small, just imagine what Spain must be like in the future.

And, of course, I say "yes", with total clarity to real problems: I say "yes" to the Autonomous Liquidity Fund (Spanish acronym: FLA), which has allowed the Regional Government of Catalonia and other Spanish regional governments to pay their debts off because, if not, they would have gone into bankruptcy; I say "yes" to paying suppliers, as we have done in many places throughout Spain; I say "yes" to trying to solve people's problems.

That is my approach and that is my philosophy. I am prepared to speak with everyone, and I have always done so; but what you cannot ask of the President of the Government of Spain is that he does something he cannot do, because no President of the Government of Spain, not I nor anyone else, can dispose of national sovereignty, because national sovereignty belongs to the people of Spain.

Hence, I am here, where I have always been, I think the same as I have always thought and say the same as I did back then. There are things that you cannot ask of me and the people who opened up this debate knew full well what my response would be. Aside from that, I am here, where I always am.

Q.- Mr President of the Government, returning to the electricity war, some voices have been heard, belonging to those who are fairly close to power, who say they miss having a Vice-President for Economic Affairs. Is that true?

Secondly, in reference to the use being made of the National Markets and Competition Commission, of the regulator on this matter, there are also those saying that they believe that to some degree the image of independence of this new regulator is being undermined, and it is becoming a form of budgetary office more than a regulator. I would also like your opinion on this matter.

President of the Government.- There are those that say many things. You have asked me for two different opinions about two specific matters, but I am going to tell you just one thing because, if you will allow me, I believe that the President of the Government should deal with that which matters.

We cannot have the third most expensive electricity system in Europe; we cannot because that goes against the competitiveness of Spanish companies and that is bad for job creation and work in our country. It is negative because one of the most important elements in the cost of companies is the price of electricity. Hence, we just cannot. And we are, moreover, a country where we must produce double the electricity that we habitually consume. So, this has no explanation because, on top of this, in the last few years electricity has gone up by more than 6%; in 2012 and 2013 it didn't; household electricity grew by 1.9% in a two-person household in 2012 and 2013. And, in addition to the price of electricity rising, the tariff deficit rose by 27 billion euros; and furthermore, each year the tariff deficit is rising by a further 10 billion euros.

So, just look, this needs to be corrected. This is a very uncomfortable situation. It would be easy to do nothing. You look wonderful to everyone if you do nothing and don't defend the general interests.

Hence, we have already implemented a significant part of the electricity reform, but we still have to do what I announced earlier, which is also an important part of the reform.

Aside from that, this has nothing to do with the existence or not of a Vice-President for Economic Affairs, and, of course, the National Markets and Competition Commission is an absolutely independent regulator. A different matter is whether some people don't like the decisions I take, but that is life itself: you don't like the decisions taken by other independent bodies, sometimes I don't like them either, but those are the rules of the game in our society. In other words, a judge hands down a ruling, you may like it or not, but someone had to take that decision. Exactly the same occurs with regulatory bodies and I should say that the National Markets and Competition Commission acts with total and utter independence.

Q.- Mr President of the Government, I wanted to ask you, firstly, about the reform of the Abortion Act, specifically about the interference in the last few days from the French Government, which has criticised your government's reform, and also from the French Socialist Party, which has called a protest outside the Spanish Embassy in Paris. I wanted to know what you think about this interference from the French Government and the French Socialist Party.

I also wanted to ask you if the government is prepared to slightly modify or negotiate any specific aspect of this new bill in its passage through Parliament. Where would the red line be?

And in passing, what do you think about the internal criticism taking place within the Partido Popular throughout Spain?

President of the Government.- A regards the first matter, I will conform with the rectification made by the French Government.

As regards the second matter, the Law is in the hands of Parliament and it is Parliament that takes the decisions. The Government has taken the decision it wanted to take.

And, thirdly, I should say that this is a matter which, at times, causes different positions to be taken within my party, but also within other political parties, as you are well aware.

Q.- Mr President of the Government, I wanted to ask you if you could give us some specifics on exactly when we are going to see a sustainable recovery in jobs in the year 2014.

Secondly, I also wanted to know if you can tell us whether you are going to reduce Personal Income Tax for all Spaniards in 2015 or only those on low incomes, as Minister Montoro announced. If that is the case, what does the government consider to be a low income? Could you give us the threshold?

Finally, I would like to know, Mr President of the Government, if you will take heed of the OECD's recommendations, which has made its official audit or control of the labour reform and has requested that Spain makes dismissals cheaper.

President of the Government.- In no way am I going to make a categorical affirmation regarding the questions you have asked me because of course it is not easy to put an exact date on what job creation will start in 2014 in Spain. But I will tell you one thing: by the end of December 2013 there will be fewer Spaniards registered at the unemployment offices than last year. That figure is certain.

As regards Social Security, the number of people contributing to the Social Security system at the end of 2013 will only be slightly less than the number contributing in 2012, and I believe that next year things will be much improved.

In terms of Personal Income Tax, I will not go into the matter, because this is a law that we haven't yet presented or even debated. Hence, all you have is the declarations, the assertions made by the corresponding minister who, by the way, is the best informed on the matter.

In relation to the matter of the OECD, this has been a good report. I am pleased with how the labour reform has performed. A few years ago we had a model under which, in order to see jobs created, required growth of 2.5 to 3%. Well, just look, this year, which will be a year we close with negative growth, the employment figures will be very different to the case if we had had a different labour reform. Hence, I am satisfied. Some minor things could be changed but this is not now one of our priorities.

Q.- Mr President of the Government, I wanted to ask you how it will affect the tariff deficit by only raising electricity prices by 2.3% instead of by 11%. Will this immediately affect the tariff deficit?

Secondly, I wanted to ask you about Catalonia. I wanted to know if it has ever crossed you mind to hold a referendum, but for all of Spain.

President of the Government.- This matter does not affect the tariff deficit. In other words, there are two parts and one is the regulated part, on which we already took our decisions, some time ago, and that affects costs for distribution, the subsidies for renewable energies, which as you are all aware, we have been reduced, and the issue of coal falls under that heading, hence it doesn't affect it.

This is the liberalised part, this is the auction that takes place to see how much it costs to produce energy, to see at what price it can be sold to people. Normally, during the last few years this price fluctuated around 40 to 50 megawatts/hour, and then it suddenly shot up to 90 euros, then two days ago plummeted to 12 euros. This is what gave rise to the actions of the National Markets and Competition Commission. The result of the first auction pointed to "a price rise, which amounted to 26%, but then the toll element needed to be taken off, and it stood at around 11%, and now, following the decision taken by the National Markets and Competition Commission, it has risen by 1.4% and 0.9% for the toll element, but no, this does not affect the deficit.

I repeat, the deficit is something which, as a result of the decisions taken, above all in relation to reducing costs, we have eliminated. Of course, I understand that, when you remove subsidies from companies, that helps reduce the deficit. It is true that it is not popular, and that's understandable, but, of course, we need to defend the general interest, of everyone; of companies as well, but also of our citizens as a whole. That is what we have done and that is what has happened here.

In relation to Catalonia, I understand that you are asking me whether I am speaking about a referendum for the whole of Spain. No, I am not speaking about any referendum. I believe that at this time it is neither a priority nor does it make any sense. What I do say - not only me, we all know this - is that whatever Spain may be must be decided by the people of Spain as a whole. That is the principle of national sovereignty. Nobody sees it any other way. It has always been like this. But that has not been decided by any President of the Government, or any government, or any political party, or even Parliament. The Constitution would have to be reformed and that reform would have to be supported by the people of Spain, because that is the essence of the principle of national sovereignty.

Q.- Mr President of the Government, I wanted to know, on the one hand, if you plan to meet up with Artur Mas in the New Year and if you feel like a "hostile landlord", which is how relations between Catalonia and the rest of Spain have been defined, like being in a house with a hostile landlord.

On another note, I have a doubt surrounding the issue of abortion. There is a conflict and within your party a certain amount of criticism is starting to emerge. I wanted to know if you appreciate the necessity to modify the proposal, what we know as the draft bill, and recover the third scenario, which it what was acknowledged in the 1985 Act and supported by the Constitutional Court.

President of the Government.- I am not going to give any advance announcement on this matter because, as I said before, this is now a matter for Parliament.

As regards my meeting with Artur Mas, I haven't been asked for a meeting and I haven't asked him for a meeting. But I meet up with many presidents of regional governments. Each one has his own problems and difficulties, and various presidents of regional governments have been here with me recently, some publicly and others more discreetly. But as I said to you before, we can talk about many things but I cannot tell the people what doesn't exist, and I cannot raise false expectations, because that would be deceitful. I can say that I cannot dispose of our national sovereignty, nor can my party, nor can the government, nor can any other political force, and the worst thing is that this was well known when the decision was taken. Aside from that, I am prepared to talk about whatever you want.

As regards hostile relations, I sincerely don't see it that way. I have been in Catalonia on four or five occasions this year and I would remind you of that: at the inauguration of the AVE high-speed railway line at the start of the year; I was in Sitges for the Círculo de Economía business forum, I was present at the Automobile Trade Fair… I have been there on various occasions and I know many people there, I have never had a single problem and hence, I do not feel that there is a hostile relationship. Of course, there isn't between government and government and, of course, there isn't, which is more important, between people. I don't know whether, within Catalonia, there may be problems and different ways of seeing things, but I can assure you that, as a Spaniard, I feel very proud of my compatriots in Catalonia, who have done so much for this country, as indeed have so many other people who are not from there.

Q.- Mr President of the Government, I wanted to go back to the question you were asked previously. Following the King's speech this week, containing this call for consensus, I wanted to ask you if you see it as viable or as easy to reach an agreement with Artur Mas to try to seek this framework of coexistence. And also with the Socialist Party, who in the last few weeks have made a proposal to that end.

I also wanted to ask you, of a somewhat more general nature, along the lines of this press conference to take stock of the year, whether you can tell us which decision taken during the course of 2013 you feel proudest of and, on the contrary, which decision you most regret or that you would have taken differently or, at least, the one you have sweated over most when it came to taking it.

And, if you will allow me a further point, I would also like to know something very specific about the Abortion Act, which is simply whether you are going to allow the Partido Popular Members of the Upper and Lower Houses of Parliament to vote freely, according to their own conscience, when this Law is passed through Parliament.

President of the Government.- I have already spoken enough about the first and third matters.

As regards what I feel most proud of or what has made me sweat over the most, you are really forcing me to make a big effort. I am proud, not satisfied, because one can only feel satisfied when a final balance is made of one's time in office and when you see the results… But I believe that the Spanish Government and, in general, all of Spanish society, has given its all on the economic issues, which have resulted in a very significant change in perception overseas.

When I came to power, I had to attend a European Council, at the beginning, in January I think it was, and the situation was extremely difficult at the time. All the talk there was about whether Spain would not meet its deficit, about Spain's foreign debt, about its problems, about bailouts, about its crises and its difficulties; that is all that was being talked about. No-one is talking about that now; no-one is talking about whether Spain, or Spain and another two countries, is going to force the Euro to collapse; and no-one is talking about whether the risk premium will inevitably lead us to a situation such as the one seen, and still being seen, in other European Union countries. Talk is now about Spanish recovery.

I have seen, for example, the latest figures on electricity consumption: in the months of September, October, November and December they are better than in the same months last year; a year ago they were on the decline and the following months also showed a worse performance. Well the same has happened with the sales of motor vehicles, and the same has happened with the unemployment situation, and the same has happened with economic growth, and the same has happened with foreign investment which, as I said before, has increased significantly with respect to 2012.

So, if you ask me about what pleases me most, I would say the change in perception of the Spanish economy both from within Spain and from abroad. And I already said at the beginning, I am aware that things still haven't filtered down to many people, some yes, because in these last few months consumption has improved. We are aware that there is still a lot to do, but at least there is a clearly marked path ahead and I hope that we can progress down this path together and successfully.

Things that I didn't like or wouldn't have done… I said this once before: it wasn't amongst my priorities, and was not even in my election manifesto - moreover, we stated quite the opposite - to raise taxes. Nor does it give me great pleasure, quite the opposite, to have taken away the Christmas bonus from civil servants. I have now been asked about the minimum wage and other things. No-one likes taking this type of decision. Everyone wants to govern in a boom period and be able to build roads, trains and make our health system much better, and raise salaries by 3 or 4%. That's the essence of life, that is only human; but a governor is under an obligation to try to provide a response to the problems before him, however difficult they might be. Neither is it a question of complaining.

You spoke to me before about the electricity sector. That is indeed a problem, but this problem must either be tackled or the electricity sector will go bankrupt, and then what would we do. There are people who don't like it. I already know that they don't like it. It is inevitable that they don't like it, but it is not done out of spite but rather because there is a problem that must be resolved and because if you don't take decisions you end up with an infinitely worse situation than if you do take them.

Q.- Mr President of the Government, 2014 will be the first year of European elections since you came to power. You have just said that the first signs of recovery have not filtered down to the man in the street.  Do you fear a protest vote as a result of the unpopular measures taken by your government or due to the cases of corruption that have tarnished the Partido Popular, specifically the Bárcenas affair?

And, if you will allow me, do you deny that there is a minister at the head of the electoral list for these elections. In other words, will there be a crisis in your government over this matter?

President of the Government.- As regards the second question, I don't rule out anything. In other words, I don't rule anyone out as a candidate, as you would expect. That, however, doesn't mean anything, because I haven't spent so much as a minute of my time on this matter, believe me when I say that. So if you ask me about who might be a candidate, my answer would me that I don't know. That is to be seen…

As regards the elections, these elections to the European Parliament… What is so important about these elections to the European Parliament? What is important is that the European Parliament that will be chosen at the end of May 2014 will be the most powerful European Parliament in history. Since 1979, this will be the most powerful European Parliament; specifically, it will have competence in 40 additional areas and hence it is a very important Parliament. Just recently it voted, for example on the fisheries agreement with Morocco, which I'm sure you will agree, is very important for us. But there are also decisions taken there on matters of agriculture, on matters of justice, security, liberty… In other words, it will be the most powerful Parliament ever.

For that reason there are two very important things: firstly, that there is a vote, and secondly, that those who become Members of this Parliament believe in Europe because, if you become a Member of this Parliament, this European Parliament, without believing in Europe, that would be ironic, particularly when it is much more powerful than any previous Parliament.

In the first elections, if I remember correctly - I cannot state this categorically - in 1979, 62% of people turned out to the polls; in the latest elections this 62% dropped to only 43%. That is not a good figure. When I say 43%, I am talking about the European Union as a whole.

Hence, what is good about this Parliament, precisely because of the power it will take on and because we are at a key point in building Europe, which, I repeat, is a true constitutional reform, is that it is very important, precisely for this reason, that people turn out to vote and vote for pro-European parties. Sincerely, those of us who are pro-European and those of us who believe in this feel this strongly. I feel this and I believe that it is very important, because many decisions are going to be taken there - they are already being taken - that affect our daily lives.

Ladies and gentlemen, if you will allow, we will wind up this press conference here. I thank you all for your efforts and your hard work, and I hope that 2014 will be a little better than this year, or indeed much better.

Thank you.