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This edition of OECD's periodic survey of Spain's economy examines the key policy challenges Spain will be facing. In particular, it examines the chellenges of returning to more sustainable growth, of managing fiscal policy, of strengthenin innovation and of improving the functioning of goods and services markets.Table of Content : Executive Summary Assessment and Recommendations Chapter 1. Main Policy Challenges -The Spanish economy has continued to expaand at a rapid pace... -...But it is more important to correct eh embalances in order to ensure sustainability -Efforts are still required to maintain sound public finances in a medium- and long-term perspective -Bolstering productivity is needed to sustain robust long-term growth -There is considerable room to further strengthen competition -Efforts to combat climate change must be continued -Looking ahead at the government's strategy -Annex 1.A1. Progress in structural reforms Chapter 2. Returning to More Sustainable Growth -Recent trends -Short-term fiscal policy and the overall macroeconomic policy stance -Short-term prospects -Structural reforms are needed to reduce the inflation differential and boost the resilience of the economy -The housing market continues to surge -Annex 2.A1. The main characteristics of housing policy Chapter 3. Medium- and Long-Term Fiscal Issues -Forces acting on the revenue side -Forces acting on the expenditure side -How should fiscal policy be managed in the longer-term perspective -Annex 3.A1. The main features of the 2007 tax reform Chapter 4. Strengthening Innovation -Strengthening the effectiveness of innovation policy -Improving the performance of the education system -Making the framework conditions more favourable for innovation -Improving the balances of hte reform strategy so as to strengthen innovation performance -Annex 4.A1. The organisation and main instruments of innovation policy -Annex 4.A2. Evaluating aid for the recruitment of company researchers -Annex 4.A3. The role of technology centres Chapter 5. Improving the Functioning of Goods and Services Markets -A reform of the general framework for competition policy is under way. -Network industry regulation can be improved -The distributive trades sector still has to be liberalised -Reforms are probably needed in several other sectors -Welcome changes to corporate governance are under way.

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