Spanish premier proposes new economic measures as Greece erupts

Spain's prime minister proposed new measures Tuesday to rein in spending and help indebted Spaniards hit by staggering unemployment and a sluggish economy.

Jose Luis Rodriguez Zapatero told Parliament in the annual state of the nation debate that next month he would suggest a spending cap for regional governments whose deficits have become a source of worry as the country tries to get its public finances in order.

Zapatero, a socialist, also announced new measures to protect Spaniards from eviction as they struggle to make mortgage payments in an economy with an unemployment rate of 21.3 per cent, a eurozone high. He gave no details but said these would not hurt banks holding the mortgages.

"There are people who are having a really hard time, but we are trying to alleviate those situations," Zapatero said.

No mention of elections

The prime minister made no mention of calling early elections as the opposition is pushing him to. His term ends in March 2012, and he will not run again.

Polls favour the conservative Popular Party to win the next election easily and thus inherit the job of steering the country through the obstacle course of Europe's debt crisis and avert the need for the kind of bailouts already given to Greece, Ireland and Portugal.

Zapatero noted that the Spanish economy is now growing, albeit tepidly, after nearly two years of recession and this expansion would pick up pace in the second half of 2011.

The premier said he wanted to use what was left of this legislative term to push through reforms and boost Spain's competitiveness, growth and job-creation.

The government's official forecast for GDP growth in 2011 is 1.3 per cent, but the IMF and other organisations have said that is optimistic.

Soraya Saenz de Santamaria, spokeswoman for the Popular Party, said Zapatero "has said nothing new, and for us the Spanish people all that remains is to wait for a new prime minister."

Zapatero said he got a bit choked up toward the end of his speech - his last state of the nation debate - as he thought about his party.

Meantime, protests and strikes have hit Greece ahead of a Greek parliamentary vote on a new austerity plan needed for the country to receive its rescue funds and avert a debt default.

Greek lawmakers will vote Wednesday and Thursday on a US$40 billion austerity plan, government spending cuts that European officials say are a necessary condition to receive the next installment of Greece's US$156 billion bailout loan from the European Union and the International Monetary Fund.

The main vote is scheduled for today, Wednesday.

If Greece rejects the cuts, it could lead to a debt default and spread instability in other financially troubled European countries.

Workers across Greece walked off the job Tuesday at the start of a 48-hour general strike while thousands of protesters held a rally outside Parliament, chanting anti-austerity slogans.

- AP