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Spain's PM to unveil new stimulus measures, seek pact

Published 05/11/2009, 09:23 AM
Updated 05/11/2009, 09:40 AM

By Andrew Hay

MADRID, May 11 (Reuters) - Spain's prime minister will propose new economic stimulus measures and an anti-crisis pact in Tuesday's State of the Nation debate, ruling Socialist legislators said on Monday.

Spanish leader Jose Luis Rodriguez Zapatero will press for extra benefit payments for the unemployed, a public spending boost and urge unions, employers and political parties to agree on structural reforms, a Socialist Party spokesman said.

"There are going to be new measures, a new push along the lines of supporting demand," said Juan Moscoso del Prado, spokesman for the Socialists' European parliamentary group, who was speaking by telephone from Prague.

In the run-up to June 7 European parliamentary elections, opinion polls show Spain's opposition Popular Party has crept ahead of the Socialists for the first time since Zapatero took office in 2004.

The prime minister hopes to use the May 12-13 State of the Nation debate to boost support among young, working-class and women voters hit hardest by soaring unemployment amid Spain's worst recession since the 1930s.

Among measures Zapatero will unveil is an extension of benefit payments to unemployed workers whose dole payments have run out, Moscoso said.

The 400 euro ($544.3) a month payment is currently only given to the most needy and vulnerable families in Spain.

His speech will emphasise the need for investment in renewable energy, education and technology after the collapse of a credit-driven housing and consumer spending boom.

Extra public spending will win backing from Spain's political left and unions, but is likely to further alienate centre right parties and business groups, analysts say.

Spain's opposition conservative Popular Party has refused to enter an anti-crisis pact unless Zapatero cuts stimulus spending it claims will stoke public debt without reviving growth.

PP Leader Mariano Rajoy is expected to use Tuesday's debate to call for tax cuts, more aid to strategic sectors like car making as well as sweeping economic reforms.

Zapatero faces criticism from business and private economists for not launching labour, education and pension reforms to spur recovery to strong, long-term growth.

Wary of stoking social tension or general strikes, Zapatero has said he will not be "blackmailed" into reforms that require broad-based consensus among employer and labour groups. (Reporting by Andrew Hay; Editing by Mike Peacock and Andy Bruce)

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