Spanish PM hopes to meet Catalan leader, Madrid to negotiate deficit targets

MADRID (Reuters) – Spanish Prime Minister Pedro Sanchez said on Tuesday he wanted to meet Catalonia’s pro-independence regional leader “as soon as possible” and hoped Madrid would start negotiations soon with the European Commission on easing its public deficit targets.

Spain’s Prime Minister Pedro Sanchez gestures at a news conference after the first cabinet meeting at Moncloa Palace in Madrid, Spain, January 14, 2020. REUTERS/Jon Nazca

Speaking after the first meeting of Spain’s new government, he also said the coalition had approved a decree raising pensions by 0.9% this year to try to ensure retirees “do not lose purchasing power.”

Sanchez was sworn in last Wednesday, ending months of political gridlock and economic uncertainty after two inconclusive elections, and announced a government lineup at the weekend including ministers from the hard-left Unidas Podemos.

He said efforts to arrange a meeting with Quim Torra, the leader of the restive Catalonia region, were already under way but a date for a meeting had not yet been set.

The Catalan separatist party ERC was instrumental in enabling Sanchez to win a confirmation vote in parliament last week, although Torra is not a member of the ERC, and Sanchez has said he will resolve the Catalan dispute through dialogue.

Catalonia voted for independence in a referendum in 2017 referendum but courts deemed it illegal and a number of separatist leaders were jailed.

The new government is tasked with forging consensus among a shaky patchwork of alliances to pass laws and improving the economy is a priority.

Spain lowered its growth forecasts late last year due to domestic and external factors such as trade tensions and raised its deficit estimate. It left the budget deficit forecast unchanged from its target of 2% of gross domestic product for 2019, but raised it to 1.7% of GDP from a previous 1.1% for 2020.

The Budget Ministry said at the time the forecast for 2020 could be revised if and when Spain is able to form a government and pass a budget in parliament.

“The economic conditions have changed for some time now, so this is a negotiation process that we will have to open with the European Commission … and we will start that negotiation as soon as possible,” Sanchez said without giving details.

Reporting by Belen Carreno, Inti Landauro, Jose Elías Rodríguez, writing by Ashifa Kassam and Andrei Khalip; editing by Timothy Heritage

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