THE Bank of Spain has announced that an IVA increase would be 'counterproductive' in the long run and would merely be a short-term solution to the country's economic problems.

An annual report published recently says the best strategy is to give Spain's foreign markets a push to increase demand, and to make exporting costs cheaper.

It also says it is the responsibility of the Central European Bank to ease financial tension by supplying liquid assets.

Also, it praises the controversial labour reform but says the key lies in promoting training, career guidance and entry to the job market for both the unemployed and those at risk of losing their jobs.

But it claims that reducing redundancy pay and notice to 'bring it in line  with the rest of Europe', and 'removing the limitations' imposed by job contracts and collective working agreements would 'allow companies to manage their workforce better'.