Iñigo Fernández de Mesa Vargas, state secretary for economic affairs, declared that “the worst is behind us” in a keynote speech at a European Covered Bond Council plenary in Barcelona today (Wednesday), playing down the risk of a reversal of reforms after December elections.

Fernández de Mesa noted that, at 1% in the first quarter of 2015 or 4% on an annualised basis, GDP growth in Spain is the highest in the EU and three times that of the EU overall. He said that growth is supported by both external and internal demand, highlighting how Spain has become “much more open” in recent years, with exports now representing 33% of GDP compared with 20% several years ago, while the contribution of areas such as construction has fallen.

While this leaves the economy more exposed to international developments – and with the oil price possibly having supported Spanish economic performance – Fernández de Mesa stressed the importance of the government’s “ambitious and painful” reform programme of the past four years.

Notable in this, he said, has been reform of the financial sector, with Spain having been the first to conduct a due diligence exercise on its banks, resulting in an increase in the level of provisions and capital buffers, and improved governance.

Fernández de Mesa said that EU reforms have also contributed to Spain’s improvement, citing Banking Union as having been very important for the country, helping bring down funding costs for Spanish SMEs, for example. He noted that lending to SMEs and households has risen in the past couple of years, helped by the bank reforms, among others. Meanwhile, the consumer sentiment index is at historic highs.

He highlighted four big imbalances that Spain has previously suffered from but which are now being corrected simultaneously: the external sector, private sector debt, the public deficit, and, most importantly, unemployment.

“We still have challenges,” he said, but added: “I believe the worst is behind us.”

Fernández de Mesa said he believes the risk of a reversal of the policies the government has pursued is quite low, in spite of a forthcoming general election in December, saying that there is recognition among the Spanish people of the benefit of the reforms.