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Zapatero : No cuts to social welfare system

Source: Dow Jones - Wed 10th Feb 2010

Spain is on its way to overcoming the current economic crisis and will do so without cuts to the social-welfare system, Prime Minister Jose Luis Rodriguez Zapatero said Tuesday.

Zapatero announced that at a cabinet meeting Friday, the government will approve an extension for another six months of an EUR 420-a-month extraordinary payment to the unemployed without any other coverage. He spoke to Socialist party members of Spain's parliament and senate.

"We will get out of the crisis, but won't permit that our social system be changed," Zapatero said, although he acknowledged that "serious efforts" and " sacrifices by all" were needed to overcome the crisis.

Zapatero spoke after Spain's stock market tanked last week amid concern about the country's high budget deficit. The cost of insuring Spanish debt against default held steady Tuesday, while the IBEX-35 stocks index rose 0.6% to 10270.1 points as of 0958 GMT.

The Spanish prime minister Tuesday repeatedly said Spain was in a deep economic crisis and had a high unemployment rate and a high public-sector deficit. But he also pointed out that the country's debt-to-gross-domestic- product ratio is about 20% lower than the E.U. average.

Zapatero blamed "speculative movements" for the steep decline in the Spanish stock markets last week. Spanish stocks had risen more than their European peers last year, he said, and now were trading more in line with them.

"I'm fully convinced that the economic recovery will be solid," he said.

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