No more cuts needed, Spanish PM claims

Spain is on track with efforts to reduce its budget deficit and needs no additional cuts to meet its goals, prime minister Jose Luis Rodriguez Zapatero said yesterday.

The country can keep current unemployment benefits and social programmes if it sticks to other planned cuts, he said.

Mr Zapatero imposed austerity measures and pushed through labour reform after turmoil on financial markets in May and June, seeking to convince investors Spain would not have to follow Greece in appealing for an international bailout.

Spain's deficit soared last year to 11.2 per cent of gross domestic product and the government has pledged to trim it to 3 per cent by 2013.

Mr Zapatero said it would take time for the country's tepid economic growth to pick up. Some economists believe it could slide back into recession.

"It is going to be difficult for growth to become vigorous and it is going to be difficult for the growth to also include clear recovery in employment," he said.

He added that energy, pension and other reforms were needed to drive growth and he pledged to push them through.