Rajoy says Spain on course to avoiding slipping into another recession

Spanish prime minister Mariano Rajoy on Monday said that Spain was on course to enact tough fiscal consolidation and structural reforms to keep the indebted country from slipping into another recession.

Spain's economy contracted by 0.3 percent during the fourth quarter, according to official figures released Monday, edging the country closer to a new recession as it deals with huge levels of unemployment and painful austerity cuts.

"Spain believes that everything should be done at the same time: fiscal consolidation, reforms, guaranteeing liquidity instruments and measures to resolve specific problems," Rajoy said at a joint news conference with European Commission President Jose Manuel Barroso ahead of a EU summit focusing on growth.

"We are going to work on this and in the first trimester of the year Spain will already have taken important measures in terms of fiscal consolidation. We are ahead of the curve, even before the European treaty has been approved, we will already have had it in our constitution."

Barroso said Spain urgently needed to implement "specific and ambitious reforms" mainly in the employment and financial areas.

"Spain is essential to the stability of the eurozone and its important that the new government engages in constructive dialogue with its European partners."