Spanish PM warns of more austerity measures if needed

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Spanish Prime Minister Jose Luis Rodriguez Zapatero warned Sunday that his government will adopt more unpopular measures if needed to revive Spain's economy and reduce the public deficit.

"I know very well that the measures which I have adopted are unpopular. I am going to apply these measures and maintain them," he said in an interview with the El Pais newspaper.

"I will do it over my future political aspirations. And no one should doubt that if I have to adopt new measures, I will adopt them."

Zapatero, re-elected to a second term in 2008, has seen his popularity sink amid a downturn in which the property market has collapsed, unemployment has risen to 20 percent, and his Socialist government has been forced to impose deep budget cuts.

In May, parliament passed by just one vote a 15-billion-euro (19.4-billion-dollar) austerity package -- including public sector pay cuts -- aimed at reducing a public deficit that equalled 11.2 percent of GDP in 2009.

The cuts were on top of a 50-billion-euro austerity package introduced in January aimed at easing market concerns that Spain could follow Greece into a financial crisis.

Zapatero said he lost sleep when deciding over the additional spending cuts that were unveiled in May.

"I was waiting to see how the markets would react. Let's just say that I spent the night waiting for the Nikkei index," he said, referring to Japan's benchmark stock index.

The government also plans to raise Spain's retirement age to 67 from 65, having already adopted an overhaul of the labour market that will make it easier and cheaper for employers to dismiss workers.

The measures have been seen as a policy U-turn on the part of unions and even some members of Zapatero's Socialist Party who accuse the government of abandoning its commitment to social policies.

Spain's two largest trade union confederations, the CCOO and UGT, have called a general strike for September 29 to protest against the labour market reform and austerity measures.

It will be the country's first general strike since 2002 and the first since Zapatero took power six years ago.

A poll published in the conservative daily newspaper La Gaceta on July 11 showed the main opposition Popular Party enjoys a 9.6 percentage point lead over the ruling Socialists.

© 2010 AFP

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