CORRECTED: Bad economic news piles up ahead of Spain vote

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More grim economic news piled up Thursday for Spain's ruling Socialists just hours before the launch of campaigning for a November 20 election expected to remove them from power.

Officially, the political campaign starts after the stroke of midnight, at the dawn of Friday.

But unofficially, most people agree the economic crisis has already defeated the Socialists, widely expected to be removed after eight years in power and replaced by the conservative Popular Party.

Latest government data showed employment -- at the heart of the election battle -- deteriorating further with the number of jobless growing by 134,182 to 4.36 million in October.

Spain last week posted a 21.52-percent unemployment rate in the third quarter, the highest in the industrialized world.

Spain also had to pay out sharply higher borrowing rates to raise 4.49 billion euros in a government bond auction Thursday, a reminder that investors still see Spain's sovereign debt as a risk.

The latest data underscored the daunting challenges facing the Socialist government.

A poll published on Sunday in the right-leaning daily El Mundo showed the Popular Party with 47.7-percent support compared to the Socialists' 31.0 percent.

A survey in El Pais, the leading centre-left daily, gave the Popular Party 45.3 percent to the Socialists' 30.3 percent.

Either result would likely give the Popular Party, led by 56-year-old Mariano Rajoy, an absolute majority of the 350 members of parliament and 208 senators.

Resentment over the crisis has boiled over into a national protest movement, known as the indignants.

The activists have called for nationwide protest on November 13 and another, on the eve of the vote, in Madrid's central square Puerta del Sol, birthplace of the movement.

"The economic crisis is ruling the electoral campaign," said Fernando Vallespin, political science professor at Madrid's Autonomous University.

"Everyone knows we are entering into a culture of austerity."

It all makes victory unlikely for the Socialists' Alfredo Perez Rubalcaba, who is leading his party's fight after Prime Minister Jose Luis Rodriguez Zapatero decided to bow out after two four-year terms.

Rubalcaba, 60, is trying to appeal to the nearly 36 million potential voters by calling for more restraint on state spending and higher taxes on the richest.

But Rajoy this week warned: "Those who created the problem cannot be the solution to the problem.

"Our main goal, our obsession, is employment," he said while unveiling his platform.

Under the slogan "What Spain Needs", Rajoy is calling for a slimmed down bureaucracy to cut costs and advocating tax breaks for companies and savers to stimulate the economy.

His Popular Party crushed the Socialists in local and regional polls in May.

The Spanish economy slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of a property bubble, which threw millions out of work.

Spain has promised to reduce its annual public deficit from the equivalent of 9.3 percent of gross domestic product last year to 6.0 percent of GDP this year, 4.4 percent in 2012 and 3.0 percent in 2013.

This year the government completed a restructuring of the financial sector and it joined with the opposition to enshrine balanced budgets in the constitution.

Last year, it raised sales taxes, froze old-age pensions, increased the retirement age, cut public workers' wages by five percent, and made it slightly less costly for firms to hire and fire.

The three major credit rating agencies, Moody's Investors Service, Standard & Poor's and Fitch Rating, all downgraded Spain's sovereign debt last month. They warned that high public and private debt levels coupled with the weak economy made the country especially vulnerable to the eurozone debt crisis.

© 2011 AFP

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