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Optimism over Spanish economy is false: Joaquin Almunia

Luke Graham, Special to CNBC

Joaquin Almunia, leading Spanish politician and former European Commissioner for Competition, has accused Spain's government of "false optimism".

Speaking to CNBC at the Ambrosetti forum on Saturday, the Spanish opposition politician explained that the ruling People's Party recovery story was not built on strong foundations.

"Part of the positive input for the Spanish growth comes from abroad. Exchange rate, oil price, monetary policy," he said. "There are other elements that are positive, so the reform, the restructuring of part of the banking sector thanks to the European Union, helped of course, and some internal reforms in Spain also helped, but not enough."

GEORGES GOBET | AFP | Getty Images

He warned that if those external factors disappear, the Spanish economy would be badly affected.

Since 2011, when the People's Party came to power, Spain's gross domestic product growth fell to minus 2.1 percent in 2013, according to figures from Eurostat. However, GDP has started to recover: the economy grew 1.4 percent, and grew 1.0 percent between the first two quarters of 2015.

Almunia was a member of the Spanish Socialist Workers' Party (PSOE), and served in government from 1982 to 1991 under Felipe Gonzalez.

A bustling street scene in Madrid, Spain, July 30, 2015.
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He compared the optimism of the current government about the economic situation to what he saw as the false optimism demonstrated by the previous PSOE administration of José Luis Rodríguez Zapatero, who was Prime Minister from 2004 until 2011.

"I remember very well the mood with a different government at that time with the Socialist government, with Zapatero, immediately before the crisis," explained Almunia. "'No, the economy is going perfectly well, we are growing more than the euro area, employment is being created, unemployment is very low.' But the fundamentals were not solid enough."

Almunia also criticised the high level of unemployment in Spain, which was 24.5 percent in 2014.

"It's a very serious problem and the quality of the new employment being created is very low," he said. "Low productivity, low wages, precarious contracts. We knew these from the past… if the general economic situation changes, suddenly many of these jobs disappear."