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By DANIEL WOOLLS
Associated Press Writer
Spain tries to wean itself from construction78 days ago
(AP:MADRID) Spain will propose reforms this week designed to wean its battered economy from dependence on the construction sector and usher in a more sustainable growth model, the prime minister said Monday.
Jose Luis Rodriguez Zapatero said that after five straight quarters of contraction the Spanish economy "is on the verge of posting positive quarterly figures," even though some foreign experts predict the economy will keep shrinking in 2010 and not resume growth until 2011.
Spain's gross domestic product fell 0.3 percent in the third quarter from the second, even as the wider eurozone officially joined the United States and Japan in climbing out of recession.
Due largely to the collapse of a real estate bubble and a slump in consumer spending, the jobless rate has roughly doubled in less than two years and now stands at an EU-high of 17.9 percent. The European Commission puts it even higher, at 19.3 percent.
Zapatero repeated his argument that Spain will take longer to get out of recession because it entered it later than many other European countries.
He said the Cabinet on Friday will approve a package of reforms to diversify an economy that once got nearly 20 percent of its output from construction and related industries. The bill will then be debated by Parliament.
He said the plan is designed to take effect in 2010 and turn the Spanish economy around over the next decade.
Zapatero did not go into great detail, but said the blueprint will focus among other things on encouraging Spanish companies to adopt a more international focus, promoting more cooperation between the state and private sector in infrastructure and other sectors, offer tax breaks for companies that innovate and stimulate sectors of the economy involved in fighting climate change.
Spain's main business federation has insisted that the key to overhauling the country's economy is to encourage companies to hire by lowering the cost of layoffs. In Spain, most employees get 45 days of severance pay for every year they have worked and these packages are among the most costly in Europe.
Zapatero has steadfastly ruled this out, however, saying he does not want workers to bear the brunt of sacrifices needed to reform the economy.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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