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Socialist Prime Minister Jose Luis Rodriguez Zapatero, is determined to cut the -11.2% deficit of gross domestic product down to -3% 'whatever the cost'.
Zapatero, who has been heavily criticised in Spain for failing to recognise the gravity of the economic crisis told the Financial Times that he is determined to take unpopular measures to reduce government spending, he said "we have a plan. A credible quantified plan. We have already begun to implement it."
Zapatero admitted that he is an optimist and quoted former US President Clinton as saying 'that pessimism has never created a single job'. The Spanish government has so far followed a strategy of spending the country out of recession but is now eager to distinguish Spain from Greece, which is predicted to require a bail-out from other Eurozone countries. Spain has so far failed to convince economists of its long term commitment to restoring lost competitiveness by reforming the labour market.
The government's measures include a near freeze of civil servants hiring to reduce the public sector's overall headcount and the wage bill.
The Prime Minister told the Financial Times "we've had to make a huge effort in public expenditure to provide social protection to our unemployed citizens and to bolster production and activity as far as we were able. But now that the deficit has got to a point thatâ€™s unsustainable, we are equally determined and we do have a three-year plan to bring it down."
Mr. Zapatero insisted that "Spain will not fall back into the second division of nations."