Spain to invest 17bn euros into infrastructure

Following the US's example of investing in infrastructure to prevent the country from falling into further debt, Spain has unveiled a 17 billion euro ($22.72 billion) infrastructure spending plan in order to attract private investment and jump-start its construction sector.

Spain has suffered heavily during the global recession and is faced with a huge budget deficit - 11.4 percent of its gross domestic product. Under the new plan, the government has stated that it expects to see funds come from both the private sector and state financier such as Instituto de Credito Oficial.

Speaking to the Spanish press, Prime Minister Jose Luis Rodriguez Zapatero said, "These projects will improve the efficiency and competitiveness of our economy, reduce transportation costs and better connect markets.

"This is the most important collaboration between the public and private sector in the history of our country," he added.

With these funds, the government has stated it would spend 70 percent of the money on improving the country's rail network and on other train services, while the other 30 percent would be spent on roads. Despite the wide range of plans, the government has stressed that no money will be spent until 2014, ensuring that Spain is financially stable before spending commences.

Infrastructure expenditure: Coming soon

While plans for Spain's infrastructure may look promising in the future, in the here and now infrastructure spending is actually expected to drop with a 3.9 percent reduction in infrastructure spending.

It is not just infrastructure spending that is being curbed; in a bid to reduce the deficit the central government has implemented a curb in overall capital spending at all government levels in the hope of seeing a reduction of 31 percent between 2009 and 2013.

So while the news may be a light at the end of the tunnel for Spain's construction firms, they still have to endure a few more years of belt-tightening. It won't be easy after the construction sector in Spain essentially collapsed at the end of 2008 causing Spain's unemployment rate to rise to 19 percent - twice that of almost the entire EU.

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