Spain Passes Delayed Budget in Boost to Rajoy's Economic Program

(Bloomberg) -- Spanish Prime Minister Mariano Rajoy won enough support in parliament to pass his long-delayed budget, boosting his claim to be the steward of the country’s economic expansion.

The budget passed by 177 votes in favor and 168 against with two abstentions. Five lawmakers from the Basque Nationalist Party voted to back the spending program, helping Rajoy’s minority government to secure passage of the bill in parliament on Wednesday.

Robust growth of the Spanish economy is one strong suit for Rajoy as he battles to shore up a government weakened by the campaign for Catalan independence and a slew of corruption scandals. Passage of the budget will offer Rajoy some respite by giving his People’s Party more time to devise a strategy to win back lost support ahead of elections due in 2020.

“What happened today in parliament is very good for Spain,” Rajoy said in comments after the budget was passed. “2018 will also be a positive year for the Spanish economy.”

The Basque nationalists said earlier on Wednesday that they would back the budget as an act of political responsibility.

The party had previously said they would oppose it as long as Rajoy continued with direct rule of Catalonia imposed after Carles Puigdemont, the former president of the region, attempted to declare independence in October. Joaquim Torra, a Puigdemont ally, took office as regional president earlier this month but Catalonia remains under emergency rule for now.

As part of the bill, the government is pledging to boost pensions as part of a pact with the PNV to ensure its support. The budget envisages growth of 2.7 percent for 2018 as Spain’s economic expansion stretches into a fifth year.

To contact the reporter on this story: Maria Tadeo in Madrid at mtadeo@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Charles Penty, Richard Bravo

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