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Spain parliament backs austerity by one vote

Source: Reuters - Thu 27th May 2010

Spain's governing Socialists won approval for a 15 billion euro austerity package by just one vote on Thursday, avoiding a defeat that would have rattled markets and potentially brought down the government.

The bill was approved by 169 votes in favor to 168 against, after the opposition Popular Party voted against, even making sure one of its deputies was brought to the session in an ambulance.

The bill was only saved when 10 deputies from center-right Catalan nationalists CiU abstained after criticizing the bill, saying they did not want Spain to be plunged into a Greek-style crisis.

But CiU said they would not support the 2011 budget bill, Spanish news agencies reported, raising doubts over how Prime Minister Jose Luis Rodriguez Zapatero will be able to continue to steer his country through a time of crisis.

CiU leader Josep Antoni Duran i Lleida told parliament Zapatero should call early elections next year.

"The problem is you and your government" he told Zapatero.

If Thursday's bill had been be defeated, the government's plans to get its budget deficit under control would have been thrown into disarray, potentially dismaying credit markets by raising concerns the euro zone's fourth largest economy was fiscally unsustainable.

The conservative opposition Popular Party (PP) is well ahead in opinion polls.

"This law is improvised, insufficient and unjust" PP leader Mariano Rajoy told parliament.

Spanish commentators said it was difficult to imagine how Zapatero would have been able to stay in government had he lost the vote, which would have sent shockwaves through markets terrified that the Greek crisis will engulf the much larger Spanish economy.

The Basque Nationalist Party said on Wednesday it would side with the Popular Party and oppose the cuts.

The government's plan aims to save an additional 15 billion euros and includes wage cuts of 5 percent for civil servants this year. It aims to cut the budget deficit to 9.3 percent of gross domestic product this year and then to 6 percent in 2011, down from 11.2 percent last year.

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