Prime Minister Zapatero seen surviving as no-one wants top job in Spain

Zapatero will use his annual address to parliament on Wednesday to argue for further deep spending cuts to attack a huge deficit, hoping that national euphoria over Spain's historic World Cup soccer victory will soften the blow.

Opposition calls for early elections grew in May but have faded in the summer doldrums. When the 2011 budget comes to the vote in the autumn, analysts say Zapatero's minority government should squeeze it through with support from a Basque party in exchange for concessions. “I don't see any possibility of early elections except in the event that the government can't get the budget through parliament,” said Julian Santamaria, political science professor at Madrid's Complutense University.

Zapatero was initially popular as a consensus leader and defender of immigrants and other minorities, presiding over an economic boom. But with one in five of the workforce now jobless, the euro zone's highest unemployment rate, his approval ratings have sunk in his second term.

Concerns that Spain might need a bailout to recover from the bursting of its property bubble have pushed up the price of debt to almost two full percentage points above benchmark German debt, compared with less than a point as recently as April.

To appease nervous investors in Spanish debt, and try to cut the soaring cost of government borrowing, Zapatero has now imposed deep spending cuts and a labour reform.

The rightist Popular Party has benefited from the downturn and gained a 10-point lead in opinion polls.
But it seems content to let Zapatero see out his four-year term and take the heat for unpopular austerity measures and a pension reform that would raise the age of retirement. “Although they are eager to get back in power, the PP probably want to wait so as not to have to take on (these) serious responsibilities,” said Santamaria.

And no matter how bitter they are with Zapatero, Spaniards have trouble imagining PP leader Mariano Rajoy, twice a loser in national elections, as prime minister. “Zapatero isn't fit for the job and Rajoy doesn't have the people's backing. We need to bring the elections forward so that we have them as soon as possible. But Zapatero is an ambitious man and he won't do this,” said Luis de la Vega, a retired property consultant from Madrid.

Zapatero's Socialists have 169 seats in the lower house, seven seats short of an absolute majority. The PP, which has 153 seats out of 350, is very unlikely to support the budget, as are the CiU Catalan nationalists, with 10 seats. Small leftist parties will also oppose the budget, especially as a Sept. 29 general strike by unions opposed to austerity measures will galvanise popular opposition to the Socialists' newly austere economic policy.