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Catalan loss embarrasses Spanish gov't

Source: Reuters - Mon 29th Nov 2010

Spain's Catalan nationalists defeated the ruling Socialists in the wealthy northeastern region on Sunday, dealing a blow to Socialist Prime Minister Jose Luis Rodriguez Zapatero.

The victory of Convergencia I Unio (CiU) reflected voters' anxiety over Spain's economic troubles and was an indication the Socialists could suffer in regional elections next year and in a national election in 2012.

The CiU fell short of the 68 seats needed for an absolute majority, winning 62 seats with 38.13 per cent of votes cast in the final count, unseating the Catalan Socialist Party, which has governed the region for seven years in a coalition with two smaller parties.

The Socialists won 28 seats and 18.55 per cent of the votes, and the conservative Popular Party, Spain's biggest opposition group in the national parliament, chalked up 18 seats with 12.35 per cent.

Polls show Zapatero and the Socialists have lost support nationally because of one of Europe's highest unemployment rates, a sluggish economy and soaring borrowing costs.

The CiU, Spain's second-biggest opposition party nationally, abstained from a vote on a 15-billion-euro austerity package earlier this year and Zapatero won approval for a 2011 budget with deep spending cuts without the support of the CiU or the Popular Party.

After Sunday's result, the CiU - a party that seeks more autonomy but not independence for Catalonia - could cause more problems for the Socialist government by seeking greater control of its own tax revenue.

The coastal region of Catalonia is the country's richest, accounting for nearly 20 per cent of gross domestic product, but it has not escaped the ravages of unemployment and Spain's deep recession.

Its debt load of nearly 30 billion euros, which has more than doubled in three years, is the largest of all of Spain's autonomous regions. Local government finances are considered one of the biggest risks to Spain achieving deficit reduction targets.

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