Economic woes cloud start of Spanish PM's second term

Spanish Prime Minister Jose Luis Rodriguez Zapatero on Monday wraps up the first 100 days of his government's second term which were marked by an abrupt economic slowdown that has hurt his approval ratings.

Zapatero, who was sworn in for a second four-year term on April 11 after winning a March general election, is scheduled to assess the performance of his new government so far at his Socialist Party headquarters later on Monday.

But Spanish media from across the political spectrum over the weekend already delivered a negative verdict, saying the government has struggled to deal with what it calls an economic "crisis".

"The crisis overwhelmed the 100 days," wrote top-selling left-wing daily newspaper El Pais while right-wing daily La Razon said Zapatero had faced "the darkest first 100 days" of his two governments.

When Zapatero first swept to power in March 2004, he made global headlines and earned applause at home by swiftly withdrawing Spanish troops from the US-led war in Iraq.

By contrast the first few months of his second term were marked by protests by truckers and fishermen over soaring fuel prices and the first bankruptcy of a major Spanish property developer, Martinsa-Fadesa, following the end of a decade-long property boom.

The Spanish economy expanded 3.8 percent last year and throughout the general election campaign Zapatero predicted it would continue to grow by about 3.0 percent over the coming years.

Since taking office the government has reduced its growth forecast, predicting it could fall below 2.0 percent in 2008 with unemployment seen rising to 11 percent in 2009 from 8.6 percent last year.

Spain, like the rest of the eurozone, has been hit by soaring oil and food prices which are fueling inflation, while its key building sector has been hurt by rising interest rates and the international credit crunch.

Growth in the first quarter was just 0.3 percent over the previous three months, and some analysts have warned the country could slip into recession, which is defined by two consecutive quarters of negative growth.

Zapatero's approval rating fell below that of the leader of the opposition Popular Party (PP), Mariano Rajoy, for the first time since he became prime minister, according to a poll carried out for radio Cadena Ser last month.

"The first 100 days of this government have demonstrated a lack of leadership on the part of Zapatero to resolve the crisis," Rajoy said Sunday.

In April the government unveiled an 18 billion euro (28.5 billion dollar) spending plan, which includes income tax rebates and funding for public works, which is aimed at reviving the economy.

It is also seeking to stimulate growth by making it easier for people to start their own businesses, with measures such as cutting the time it takes to complete the paperwork to just 24 hours.

Zapatero however has ruled out cutting public spending as the economy slows as has been demanded by the PP.

"I say no to the proposal from the right to make drastic cuts to public spending as this would come at the expense of spending on social programs," he told a party meeting in Barcelona on Sunday.

Nearly two-thirds, 63 percent, of those surveyed felt the government did not know how to deal with the economic slowdown while 75 percent labeled the state of the economy as "bad" or "very bad", a poll published in daily El Pais earlier this month found.