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Spain's leader sees jobs growth in 2014

Spain's recession-battered economy will grow and create jobs in 2014, Prime Minister Mariano Rajoy, pictured at Parliament on December 20, 2012, predicted in an interview published Monday.

Spain's recession-battered economy will grow and create jobs in 2014, Prime Minister Mariano Rajoy predicted in an interview published Monday.

The Spanish leader told the conservative daily El Mundo that he hoped an improving economy would allow him to reverse some painful and unpopular austerity policies, including a rise in income tax.

"I hope next year will be better," Rajoy said.

"I am confident -- and all the international organisations and analysts' reports confirm this -- that 2014 will be a year of economic growth and job creation," Rajoy said.

The eurozone's fourth largest economy fell into recession in mid-2011, less than two years after emerging from the last downturn sparked by a 2008 Spanish property crash and global financial crisis.

The government has forecast a 1.5-percent economic slump this year. It expects a further 0.5-percent contraction in 2013, far more optimistic than other forecasts such as those of the OECD which forecasts a 1.4-percent decline.

The leader of the right-leaning Popular Party, who took power a year ago promising to create jobs and fix Spain's finances, said the economic situation he inherited was worse than he had anticipated, with a bigger-than-expected deficit and a recession.

"My most important priority is to get Spain out of the crisis," said the 57-year-old premier, who was chosen by the newspaper as its person of the year.

"As economic activity improves and the government brings in more income, we will change some decisions such as income tax," Rajoy said. His government raised the top rate of income tax to 52 percent to help rein in the public deficit shortly after being sworn in.

The Spanish leader said he did not regret any economic measures he had taken but he realised they had angered many people.

"We thought things through, I don't like to improvise. But I think the income tax rate is high in Spain although I don't regret that today."

Other decisions including not raising pensions by the cost of living and stripping public sector workers of their Christmas bonus, which is equal to one month's salary, had been difficult, Rajoy added.

"I think many people understand that reality forces you to take difficult decisions and it is better to take them than not doing so, especially if you want to face the future with some hope."