Spain's socialist premier calls early election as economic woes increase

Spanish premier Jos Luis Rodriguez Zapatero has announced early elections for November, four months earlier than anticipated, to give his Socialist Party a better chance to stay in power.

Mr Zapatero set the election for 20 November even though he was not required to call elections until March and had resisted calls by the conservative opposition for a snap election.

He said: "I want a new government to take control of the economy from 1 January next year." He has said he will not seek a third term.He added: "It is convenient so a new government can take charge in 2012."

The early elections are expected to help the Socialist Party candidate, Alfredo Perez Rubalcaba, Mr Zapatero's former interior minister. The Socialists have trailed Popular Party candidate Mariano Rajoy, but a poll on Wednesday suggested they were closing the gap.

The miserable state of the economy is the single largest concern in Spain - hours before Mr Zapatero's announcement, ratings agency Moody's warned it could soon downgrade the country's credit rating again.

Educated young Spaniards are looking abroad for work while others dumb down their CVs in a bid to secure unskilled work.

The country's biggest international companies, including telecommunications firm Telefonica and Banco Santander, are increasingly relying on branches in booming Latin America while their Spain businesses dwindle. "The only solution is to leave Spain, but that is a shame," said 25-year-old Monica Lopez, a journalism graduate who worked as a clerk in a debt collector's office before being laid off. "I am completely fed up.

Unemployment is at a eurozone record 20.9 per cent and austerity cuts to reassure the markets have fuelled discontent. The retirement age has been lifted to 67, taxes increased and wages cut for public sector workers. Troubled banks have been forced to merge.

Anti-austerity protests have mushroomed, mainly involving young demonstrators aged 16-29 who face a 35 per cent unemployment rate.

There is no doubt the Socialists are under pressure. They hold a minority in the Cortez, have just barely managed to rule through alliances with small parties, and were trounced in regional and municipal elections in May.

Mr Rajoy claimed the announcement as a victory. "Early elections are what the majority wanted," he said.

MODERATE WITH SHOCK PLAN

Spanish opposition leader Mariano Rajoy sees himself as a moderate head of the right-wing Popular Party (PP), but is ready to inflict shock therapy on the economy if he wins in November.

Opinion polls suggest that Mr Rajoy, a 56-year-old father-of-two, will lead the PP to victory over the ruling Socialists in the elections after seven years in opposition. Mr Rajoy expects a wave of strikes and protests in his first year in office, PP sources say.

But he is determined they will not derail intense reforms aimed at preventing Spain becoming the next victim of the eurozone debt crisis. Mr Rajoy is a cycling and tennis fan, popular sports across Spain.