Former Spanish minister of finance Carlos Solchaga yesterday called on hoteliers to moderate their prices so that Spanish tourism can continue to be competitive. He also called on the Balearic PP (Popualr Party) to join forces with the local government to press for the development of the special tax regime for the islands, known as the REB. Speaking at a press conference in Palma, Solchaga, a member of the Steering Committee of the Eurogroup 50, said that any impact on the local economy of a hypothetical fall in the world economy would be “moderate,” and so there would be no need to discuss emergency aid or compensation for the Balearic tourism sector. Accompanied by Balearic finance minister Joan Mesquida, he said that “maintaining a differential inflation in Spain is a luxury we cannot allow ourselves,” given the importance of tourism in the Spanish economy, especially in hostelry. He said that hoteliers should reflect on what extent the success of their businesses depends on the revision of prices and services they offer. As to the development of the REB, a law which allows for compensation for the additional costs of islands, and which is currently being delayed, Solchaga called on the Balearic PP to “use the relations it has with the conservative government” to ask for it to be applied. He pointed out that there were some aspects which could be considered urgent, such as declaring air links between the island and the Peninsula a public service, in order to limit the cost of flights and compensate the increases of recent years. Asked about the new system of finance for the islands, in the negotiation of which he took part, Solchaga said it had “been clearly beneficial for the interests of island residents.” The former minister went on to say that the international economy and the European in particular, will improve during 2003 even though there is still a lot of uncertainty about Germany. But he predicted a brighter outlook for tourism in the Balearics next year, as the German and British economies would grow by about two per cent.