London.—An economic think-tank (CRE) led by Antoni Riera made the gloomy forecast yesterday. Riera said that the Balearic government had plenty to do to get the local economy back on track. He called for further massive cuts in government spending. “I feel that the government should be reducing their costs far more,” he said. Balearic President Jose Ramon Bauza has already come under fire in some quarters for his major spending cuts. Earlier this month the director of the Emergency and Accident department at the new Son Espases hospital resigned over government cuts. Teachers and civil servants are also poised to join the wave of industrial action which is being planned.

According to the think tank´s report the local economy ended 2011 with a modest growth of just 0.3 percent. In this quarter all forecasts point to a return of the recession. The International Monetary Fund has claimed that the Spanish economy will contract 1.7 percent this year as the euro-zone debt crisis continues to bite.

Economic woes
There is bad news all round for the local economy. l Unemployment rose from 15 percent in September to 22 percent in December and there are now technically 100'000 people without a job in the Balearics. l The number of tourists coming to the Balearics in December fell by 22.5 percent. This was partly as a result of the severe lack of flights. This winter there have been no directs links between Palma and Scotland. l Balearic exports fell by almost 25 percent, according to the report. Riera said that the only way forward for the local economy was for the local government to work with the private sector. He said that the central government´s labour reform would also make it easier for companies to hire and fire workers which in the long-run would benefit the local economy. The only bright spot on the horizon is claims that the islands can look forward to a bumper year for tourism with a record number of holidaymakers heading to the Balearics.

A good summer season would naturally help the economy.