Spain's lower house overturns senate budget veto

19th December 2008, Comments 0 comments

The lower house passed the budget by 178 votes to 163, despite legislators’ comments that the proposal is outdated.

MADRID – Spain's lower house Thursday passed the 2009 budget, overturning a veto in the Senate where legislators had slammed the proposal as outdated given the country's fast deteriorating economy.

Prime Minister Jose Luis Rodriguez Zapatero's Socialist Party received the support of two small regional parties to pass the measure by 178 votes to 163.

The government presented the austerity budget in September in a bid to drag the country's once-booming economy out of a malaise spurred by a decline in the housing sector and the global financial crisis.

It predicts the country's first budget deficit for several years.

But it is based on a forecast of 1.0 percent economic growth next year, while the International Monetary Fund last week forecast that Spain's economy will shrink by at least 1.0 percent next year.

Economy Minister Pedro Solbes acknowledged Thursday that the budget was "less up to date" due to the worsening global financial crisis than since it was approved by the government, and would lead to "some loss of revenues".

On 9 December, the Senate voted against the budget 135 votes to 127, with one senator from the opposition Popular Party saying it "did not correspond to reality" and was "useless and out of date".

The spokesman on the economy for the opposition Popular Party, Cristobal Montoro, said Thursday the house had approved "the worst budget in the history of democracy" as it would lead to more unemployment and a higher budget deficit.

In Spain "we lack an economic policy that confronts a crisis of this magnitude, which will also continue next year," he said.

After flourishing for a decade with several successive years of surplus largely thanks to its booming construction industry, Spain is now on the verge of recession after gross domestic product contracted 0.2 percent in the third quarter.

The slowdown has led to the loss of tens of thousands of jobs in recent months, mostly in construction and the services sector.

During a parliamentary debate on the budget, Zapatero predicted that his government's recent 11-billion-euro stimulus package will lead to a sharp rise in job creation during the first half of 2009.

"It will be at that moment, in March or April, when we will have an intense rhythm of public works underway that will without a doubt create jobs at a considerable rate," he said.

Spain's unemployment rate has risen steadily since it dipped to 7.95 percent in the second quarter of 2007, its lowest level since 1978, to 12.8 percent in October, the highest rate in the 27-nation European Union.

When Zapatero unveiled the stimulus package late in November, he predicted it would create 300,000 jobs next year.

The government passed its budget proposal for 2009 thanks to the support of two small regional parties, the Basque Nationalist Party (PNV) and the Galician Nationalist Block (BNG).

The socialists needed the backing of the two parties as they are seven seats short of a majority in parliament.

[AFP / Expatica]

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