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Spanish election: It's the economy, stupid

Spanish Economy Minister Luis de Guindos has told CNBC he believes the Spanish electorate is "mature" and will not take the country back to 2010 or 2011 when it heads to the polls in less than three weeks' time.

"I do not believe that the Spanish population wants to take Spain back to the position we were in in 2010 or 2011, I am totally sure they would not repeat that mistake," De Guindos told CNBC Tuesday.

"I think that the Spanish population is mature, they are wise. They know perfectly where we are stood only four years ago and where we stand today. And I think that this contrast is a clear indication of the efforts that we have implemented."

De Guindos is a member of Spain's conservative People's Party led by Mariano Rajoy which took over from the socialists in 2011.


Spain's Minister of Economy Luis de Guindos
Saul Loeb | AFP | Getty Images
Spain's Minister of Economy Luis de Guindos

Spain's economy has indeed staged a dramatic recovery from the financial crisis that hit in 2008. The spectacular crash of the country's housing market after a massive property boom led to large debt defaults and several of its major lenders needing to be bailed out or closed. De Guindos became economy minister as Spain grappled with the fallout from the burst property bubble and played a key role in negotiating the bailouts.

Like other euro zone countries that received bailouts, Spain has had to adhere to strict austerity measures, making Rajoy's government unpopular. Austerity may have started to bear fruit, however, with the Spanish economy recovering rapidly.

The latest gross domestic product (GDP) data released in November showed that, in the third quarter Spain's economic output grew by 0.8 percent, one of the fastest growth rates in the euro zone.

"It's relevant that the economic situation of Spain is totally different than it was four years ago. It's also not only the present economic situation, it's also the prospect. It's the outlook. Now we have reduced imbalances in the Spanish economy. I think that it's perfectly feasible to have the Spanish economy growing at a rate close to 3 percent over the next few years," De Guindos told CNBC Tuesday.

Rajoy and his party, which has been racked with corruption scandals, are banking on the economic recovery as a vote winner in the general election on December 20. Unemployment remains a problem, however, with 21.6 percent of adults out of work in October. The figures are even worse for young people aged 16-25 with 47.7 percent of them unemployed.

Other issues dominating the Spanish election debate include a potential Catalonian secession and questions over corruption in Spanish politics. The latest polls showed that Rajoy's PP has a narrow lead in the polls above the Socialist party and Citizens party but the lead is not enough for the party to govern alone, Reuters reported. The radical leftist party Podemos is lagging the others in the polls.

De Guindos said it was important to maintain confidence in the country and its investment opportunities despite the persistent problems of unemployment and debt. "Through confidence we could have a very rapid impact on the Spanish economy. If confidence is (damaged)…immediately the financial conditions could worsen rapidly."

As with other countries in the euro zone, Spain has seen the rise of populist, anti-austerity parties such as Syriza in Greece or Podemos in Spain. Podemos saw a surge in the polls but the climax of Greece's financial crisis in the summer, in which capital controls were imposed amid fears of impending bankruptcy, have not reflected well on Podemos.

De Guindos believed the images from Greece of bank closures and restrictions on withdrawals had deterred people from voting for an anti-austerity party.

"The image of retired people lining up in front of an ATM to withdraw money (in Greece), I think it had a lot of impact on the Spanish population and especially in the possibilities of the political party like Podemos and I think that this was a reality check for everybody."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter:@CNBCi. Follow us on Twitter and Facebook.