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Zapatero gears up for deficit-cutting initiative

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Zapatero gears up for deficit-cutting initiative


Criticised in the country for taking insufficient action over Spain’s financial crisis; under pressure from his own party over tumbling popularity polls; Prime Minister Jose Luis Rodriguez Zapatero has insisted his government is in the driving seat to cut Spain’s crippling budget deficit.

He told Socialist Senators, ahead of Friday’s scheduled parliamentary address, that serious efforts and sacrifices would be needed. But along with those sacrifices he also refused to cut social services and would even extend a loan to the jobless whose entitlement to benefits had run out.

Trade unions, keen to show they are doing their bit, yesterday agreed with Spain’s employers’ confederation to limit wage hikes to one percent this year and under two percent until 2012.

Spain has been hard hit by the global downturn. Unemployment has reached over 18 percent – the average in Europe is 9.5 percent. Its deficit is one of the highest in Europe at 11.4 percent, just behind that of Greece.

But there comparisons end. Analysts say Spain would need six or seven years of deficit to become another Greece.

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