The funds allocated to a plan to boost jobs for young workers will end up being a deficit on the national budget. This is something that the government tried to avoid up until the last minute, but ultimately its efforts fell short. Cristóbal Montoro is butting heads with Oli Rehn, Vice President of the European Commission. Rehn wants governments in countries that are struggling with unemployment, such as Spain, to take their budgeting process seriously and to increase their level of commitment toward creating jobs.
Laszlo Andor, the Employment Commissioner, underscores Rehn?s position and wants "nations to make firm commitments to creating jobs for young people" and set aside funding to maximize the efficacy of job creation policies. With the EU's help, Spain is working on a project to allocate 1.8 billion euros toward creating jobs for young workers such that the funds don't show up as a deficit on the national budget -- or to have the EU front them 100% of the aid. But the EC has little faith. Further, it will only come up with between 1% and 3% of the funding allocated to this time period.
Montoro's problem is that between this year and next he has to reduce the deficit by around 24 billion euros. Rehn is standing his ground and says that Spain needs to finish carrying out reforms to increase tax revenues and cut government spending. From the EU's perspective, Spain needs to figure out its priorities and achieve its goals without resorting to accounting tricks.
