Spain's PM calls early elections in November

Spain's Prime Minister Jose Luis Rodriguez Zapatero Friday called new general elections for November 20, four months early, saying the government had put the economy back on the road to recovery. "The course is set. So I am announcing a timetable for elections, which will be held on November 20," Zapatero told a news conference. This date "will allow us to finish substantial matters and will enable the new government to confront the challenges of the country from January 1." The announcement came as Moody's threatened to downgrade the country's debt rating and as official data showed the jobless rate remained the highest in the industrialised world. But Zapatero said the economy was set to recover. "In a very complicated context, the economy is showing positive signs... We have put in place the bases for the recovery. "For this reason, it is the moment to announce a timetable for the next general elections." The collapse of the property bubble in 2008 and the global financial meltdown plunged the country into recession in late 2008 and sent uemployment soaring. The economy stabilised in 2010 and has shown slow growth in early 2011. Zapatero, first elected in March 2004, announced in April that he will not seek a third term as Socialist leader in the next elections. The party chose Alfredo Perez Rubalcaba, then interior minister and a party heavyweight, to replace him. Rubalcaba, 59, promised to tackle crippling unemployment and to listen to "the street" as he took charge of the party earlier this month. The government does not have to go to the country before March 2012. But since the ruling Socialist Party was crushed in local and regional elections in May, the opposition Popular Party has pressed the government to call the polls early. Some senior Socialist Party members appeared to agree, Spanish newspapers El Pais and El Mundo said on their websites. "Zapatero seems to have finally given in to the wishes of the party and the Socialist candidate, Alfredo Perez Rubalcaba, and decided to move up the general elections to November." PP leader Mariano Rajoy welcomed Zapatero's announcement. "This is good news because it's what most Spaniards want," he told a news conference. The elections will provide "the necessary impetus for Spain to emerge from the crisis that we are in." He warned that whichever party wins "will have a very difficult task." In the May elections, a huge swathe of the electorate, furious over Spain's economic crisis and soaring unemployment, abandoned the Socialists for the PP, which is expected to romp into office after eight years in opposition. But an opinion poll this week indicated that the Socialists have cut the opposition's lead to 7.1 points from 10.4 points since Rubalcaba was named. PP members have also been embroiled in a corruption scandal that led to the resignation last week of Francisco Camps as head of the eastern Valencia region's autonomous government. A judge had ordered Camps to stand trial for alleged bribery. The announcement came as Moody's warned it planned to downgrade the country's credit rating, currently at "Aa2", that of four major banks and six of the country's 17 regions. Spain, with an economy the size of those of Greece, Ireland and Portugal combined, has been battling to convince markets that it should not be lumped together with the three lame ducks now under EU and IMF rescue programmes. But it continues to suffer from the risk of contagion from the crisis. Moody's said that the pressure on Madrid could be exacerbated by fears over the new European deal to rescue Greece which had "created a precedent" by involving the private sector and signaled a growing risk for investors holding bonds in the fragile countries of the eurozone. Also Friday, official data showed that unemployment had eased in the second quarter, to 20.89 percent from 21.29, but remained the highest in the European Union and in the countries of the Organisation for Economic Cooperation and Development (OECD). "We still have a high unemployment rate... but the data published today shows a certain change in tendency," which "will continue in the coming months," said Zapatero.