Spanish prime minister vows to lift economy amid joblessness

José Luis Rodríguez Zapatero gave a 90-minute speech to Parliament that was a curtain-raiser to his second term. (PIERRE-PHILIPPE MARCOU/AFP/Getty Images)

MADRID - Prime Minister José Luis Rodríguez Zapatero promised a raft of measures to stimulate Spain's ailing economy yesterday and challenged the conservative opposition to support the Socialist government in fighting Basque terrorism.

In a 90-minute speech to Parliament that was a curtain-raiser to Zapatero's second term in office, the prime minister, who was reelected in March, said that economic growth and employment rates would be lower than during his first term but insisted that Spain faced the downturn "in very good condition."

"Spain's economic mood will be different during the first part of this government from how it was over the past four years," Zapatero said. "Our strong economic footing acts as a good buffer, but it is not a wall that protects us from global problems."

Lawmakers will vote today on the new government led by Zapatero.

Spain's economic worries have topped the political agenda in recent months as the global credit crunch aggravated a slowdown in the real estate bonanza. After a 10-year boom during which the economy grew faster than almost any other in Europe and unemployment fell to a low of 8.5 percent, growth is slowing and the jobless rate rising.

BBVA, one of Spain's leading banks, on Monday predicted growth of 1.7 percent to 2.2 percent this year, compared with 3.8 percent last year, and a slowing in 2009 to 0.8 percent to 2 percent.

Recapping a series of economic measures promised during the election campaign, Zapatero said the government would give a rebate of 400 euros, or $620, to taxpayers, cut some business taxes, and finance infrastructure projects to replace jobs lost in the slowing construction industry.

He vowed to raise pensions and the minimum wage, announced incentives for companies that employ older women, and provide child care facilities for workers. He said paternity leave would be extended to four weeks from two.

"I ask for your trust in turning our economic growth into social growth," he said. "The government that I aspire to lead will not sacrifice social policies."

The challenge faced by the government as it tries to mitigate the effects of the slowdown has grown since the March election. The government plans to spend part of its record budget surplus - equivalent to 2 percent of gross domestic product last year - on low-income housing and infrastructure projects.