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Zapatero says no further cuts planned

By Al Goodman, CNN
Spain's Prime Minister Jose Luis Rodriguez Zapatero says the govenrment is not planning any additional austerity cuts.
Spain's Prime Minister Jose Luis Rodriguez Zapatero says the govenrment is not planning any additional austerity cuts.
  • Prime minister insists Spain's economy is recovering
  • Socialists pushed through controversial labor reform
  • General strike looms for September 29
  • Spain

Madrid, Spain (CNN) -- With a general strike looming on September 29, Spain's prime minister said Friday the government does not plan new cutbacks to shore up the sagging economy.

"We do not plan any additional cuts. There is no need, objective need, to, as of today," Zapatero said in his first interview in months, with Spain's leading SER radio network.

"The pace of deficit reduction is being met and we need to continue with the reforms," Zapatero said.

Some of those reforms are what led Spain's two-largest trade unions to convene the first general strike since Zapatero, a Socialist, took office six years ago.

On Thursday, the Socialist Party was isolated in parliament as it provided the sole votes to approve a controversial labor market reform that would make it significantly cheaper to fire workers, which has enraged unions.

The aim is to give businesses more flexibility that they have demanded, and the government hopes it will build in more productivity to the economy and cut Spain's 20 percent jobless rate, the highest among the nations using the euro as a currency.

The isolated Socialists got the measure through parliament only due to abstentions from some of their allies in smaller parties.

As the vote occurred, several thousand union leaders meeting in an auditorium across town from the parliament shouted loudly for Zapatero to resign.

But in the interview on Friday, Zapatero projected an optimistic note, insisting that Spain's deficit reduction plan is working, and that economy is improving.

He said the Spain is on target to cut the public deficit, which was 11.2 percent of gross domestic product in 2009.

The government aims to cut the public deficit to 9.3 percent this year and 6 percent next year.

He said many Spaniards and companies remain heavily indebted due to the country's worst recession in decades, after the booming construction and housing sectors screeched to a standstill.

But Zapatero said Spanish banks have recently been able obtain funds on international markets, a sign of increasing confidence in Spain's ability to recover.