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Rajoy sees budget, and job reforms before summer

Source: Reuters - Mon 14th Nov 2011

The head of Spain's center-right opposition party, widely expected to win next Sunday's general election, hopes to complete labor market reform and have a banking sector overhaul all but finished before next summer.

"(Before the summer we will approve) the Budget Stability Law, which will build upon our constitutional reform and be the first sign at home and abroad that we take things seriously," Mariano Rajoy, head of the People's Party, told newspaper La Razon on Sunday.

In September, Spain ammended its constitution to limit the public deficit and debt, answering a call from euro zone heavyweights France and Germany aimed at instilling investor confidence.

"The 2012 Budget should also be approved, the restructuring of the financial sector should be in its final stages and the labor market reform should also be approved (by then)" he said.

"We have never been at a crossroads like this one, when there are voices that are even suggesting a two-speed euro. If that happens, it would be lethal for Spain," he said.

Last week EU sources told Reuters that German and French officials are touting the possibility of some euro zone countries deepening economic integration while leaving behind those, in the southern periphery, who could not keep up.

Rajoy added that one of his first tasks would be to ensure banks' assets are quickly revalued at real prices, but did not see the creation of a "toxic bank."

"I can't see it right now (the creation of a toxic bank). (But) I do think it's necessary that the valuation of assets at real prices be made as quickly as possible."

Spain's banking sector is saddled with unsellable property and debt in the hangover from a prolonged real estate boom, and some bankers have suggested the creation of a "bad bank" which would group assets whose value has shrunk.

The Bank of Spain recently estimated that the sector had around 176 billion euros worth of doubtful property assets.

The PP is expected to win the election with a lead of between 14 and 18% over the ruling Socialists.

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