Government prepares plans to shore up ailing economy

17th March 2008, Comments 0 comments

Socialists already at work on "multi-faceted" approach

17 March 2008

MADRID - In three weeks’ time, José Luis Rodríguez Zapatero will be reinstated as Spain's prime minister for a second term, marking the start of a legislature in which one issue is likely to overshadow all others: the economy.

According to government and Socialist Party sources, administration officials are already working hard on a multi-faceted plan to get Spain through what at best will be an economic slowdown but which could turn into a fully blown economic crisis.

One of the first moves of Zapatero's new government will be to approve tax breaks of EUR 400 per year for workers, pensioners and the self-employed in a bid to stimulate economic growth following the end of a decade-long housing boom. The cash injection into consumers' pockets, at a time when fuel and food costs are rising sharply, is expected to be approved during the first cabinet meeting on 11 April, possibly parallel to new measures to counter rising unemployment.

In addition, the government is planning to set up a consumer-price observatory to track basic goods prices from farm to fork in order to detect exorbitant profit margins and counter price gouging by producers, processors or distributors.

On the housing front, the government plans to enact measures to let cash-strapped homeowners extend the repayment period on their mortgage at no cost, and to take further steps to get more rental property onto the market.

The most important measure, however, will be massive increases in government spending on infrastructure. In the first two months of this year alone, the government tendered out projects worth more than EUR 5 billion.

[Copyright El Pais 2008]

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