Fickle Zapatero pledges aid for construction firms

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Spanish Prime Minister changes his mind, announces a EUR 3-billion credit line for builders who agree to rent out their unsold housing stock on Wednesday.

11 September 2008

MADRID -- Prime Minister José Luis Rodríguez Zapatero backpedalled Wednesday on assurances he would not bail out Spain's struggling construction companies, announcing a EUR 3-billion credit line for builders who agree to rent out their unsold housing stock.

The move, which will help construction companies refinance loans taken out in the boom times before Spain's property bubble burst in 2007, was made public by Zapatero in a tense Congress debate focused on Spain's rapidly deteriorating economy.

"These are concrete steps to make the property sector more competitive while encouraging the rental market and providing liquidity to companies with big stocks of property assets," the prime minister said.

Three days earlier he had said he would not spend money on saving companies that have had big profits.

Zapatero also indicated that he is willing to increase public spending to boost the economy even if it means running up further budget deficits.

"It is valuable to have the ability to run up debt at adverse times," he argued.

The prime minister acknowledged that Spain is facing a period of economic "stagnation" and that the coming quarters will be "difficult and complicated”.

He avoided using the word recession during the debate, despite his economy minister, Pedro Solbes, raising the prospect on Monday.

Revised forecasts published by the European Commission Wednesday predicted that the Spanish economy will shrink in the third and fourth quarters, putting it in a technical recession.

When pressed on the subject by opposition lawmakers, Zapatero's response was to say that forecasts often turn out to be "wrong".

"After listening to your speech, the first thing I want to ask is why did you bother coming here?" Popular Party leader Mariano Rajoy asked.

"If you are not capable or willing to provide solutions... then at least stop being part of the problem."

[El Pais / Fernando Garea / A E / Expatica]

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