Spain's austerity leader Rajoy takes power

Spain swore in new conservative Prime Minister Mariano Rajoy on Wednesday, putting him at the helm to steer the country out of an economic crisis through tough spending cuts. The bearded Galician, 56, took the oath of office a month after voters confronted by a worsening economy ousted the governing Socialists in an early election. With more than five million people unemployed and warnings of a fresh recession looming, Rajoy has vowed to create jobs, clean up banks and reassure investors over the country's finances by immediately passing budget reforms. He has promised to deepen the spending cuts that have already have hit hospitals and schools in some regions, bringing thousands on to the streets in protest in recent months. "I swear to fulfill faithfully the duty of the head of government with loyalty to the king, and to safeguard the constitution," Rajoy said in a televised ceremony at the Zarzuela palace. He later arrived for work, briefcase in hand, at the residence of Spanish premiers, the Moncloa in western Madrid, where he said he would announce the names of the ministers in his government on Wednesday evening. The new cabinet is due to formally take office on Thursday and hold its first meeting on Friday. Among names cited for the key post of economy minister are his party's economic chief Cristobal Montoro, European Central Bank board member Manuel Gonzalez-Paramo, former IMF head Rodrigo Rato, and ex-Lehman Brothers banker Luis de Guindos. Rajoy's warnings of further austerity did not stop his Popular Party winning the November 20 general elections and seizing control of the 350-seat Congress, which on Tuesday voted by a majority of 187 to install him as premier. "I know that things are going to be difficult, but I am keen, I have hope and determination to take Spain forward," Rajoy told reporters on Tuesday. "A government cannot do absolutely everything. A government is there to create conditions for people to be more free, so that people can work and generate well-being, wealth and jobs." In a speech to parliament ahead of his investiture, he said he would cut Spain's deficit by 16.5 billion ($21.7 billion) in 2012, through sweeping cuts, with only pensions escaping the knife. Rajoy has vowed to stick to Spain's targets to cut the deficit to 4.4 percent of gross domestic product in 2012 and 3.0 percent of GDP -- the EU limit -- in 2013. He acknowledged this week that the country may miss its deficit target of 6.0 percent of GDP this year and warned that if the figure reaches 7.0 percent, the government will have to make 10 billion euros more in cuts. "The more people help and join in this project for national recovery -- for we are going through a serious crisis -- the better for the interests of all Spaniards," he said on Tuesday. In a sign that investors were encouraged by his words, borrowing costs more than halved when Spain auctioned more than 5.640 billion euros ($7.4 billion) in short-term government debt the day before his oath-taking.