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Spanish government cuts short holiday as economy collapses

Spain's cabinet ministers took the unprecedented step of interrupting their summer holidays to hold an emergency meeting on the nation's deepening economic crisis.

 

By Fiona Govan, Madrid Correspondent 
Last Updated: 4:48PM BST 14 Aug 2008

Jose Luis Rodriguez Zapatero, the Spanish prime minister, sought to address the "stagnation and slowdown" of the economy when he announced a package of 24 measures designed to lessen their effect.

Spain is among the European countries that, like Britain, have been hardest hit by the kock on effects of the economic downturn and credit crunch in the United States.

Mr Zapatero made the rare move of convening his cabinet during August, when Spaniards traditionally take their annual leave and Madridrelos escape the stifling summer heat of the capital. He called the meeting to approve a raft of measures that include the elimination of inheritance tax and the injection of finance into state housing projects.

The move came a day after figures showed that second quarter growth dropped to 0.1 per cent, its lowest level since 1993 when Spain emerged from its last recession and housing crisis.

"We face a situation of economic stagnation and a steep slowdown," Mr Zapatero said after chairing the cabinet meeting and after cutting short his family holiday in the remote Doñana national park. "The government is working to make sure that the economy recovers as soon as possible."

The cabinet approved the provision of a 20 billion euro (£15.9 billion) finance package in a bid to stimulate the economy and avoid a looming recession.

The package also aims to simplify environmental plans for public works and cuts red tape for small and medium-sized businesses. It will also boost railroad infrastructure, launch a partial privatisation of the airport system and allow longer opening hours for retailers.

The Spanish government's new measures are in addition to an 18 billion euro spending plan announced in April aimed at reviving the economy.

But the conservative opposition have accused Zapatero, who was re-elected to a second term in March, of being too slow to take action on the economy and branded the government's extraordinary cabinet meeting as nothing more than a publicity stunt.