By Jason Webb

SPANISH Prime Minister Jose Luis Rodriguez Zapatero, before flying to England to address the Labour Party Conference, yesterday accused business leaders of selfishly arguing for easier rules on firing workers in a sign of a growing breach between the Socialist government and companies.

In an interview with Spanish radio, Zapatero said he would not give into pressure from “the powerful”, a reference to business leaders who left talks with the government and unions on boosting Spain's competitiveness during the economic crisis.

The Socialist leader's rhetoric has become more aggressively left-wing in recent months as he tries to maintain the support of core voters during a year when the government expects the economy to contract by 3.6 percent.

Asked who he meant by the powerful, Zapatero replied: “All those who have been asking the government to make it easier to fire workers. “That's who I mean by the powerful. I really think they lack a certain sense of what is good for the country and a certain sensitivity,” he said. Spanish companies want labour rules made more flexible to boost productivity in an economy where inflation long outran the eurozone average and which became over-reliant on services and construction during a now defunct property boom.

But the prime minister's language will further disillusion business leaders already unhappy with the economic management of the government, which on Saturday announced it would boost value-added tax by two percentage points as it tries to cut the budget deficit back from roughly 10 percent of output.