June 28, 2011 / 12:18 PM / 8 years ago

UPDATE 2-Spain plans new reforms before legislature ends

LONDON, Jun 28 (Reuters) - * Growth to gain pace in second half - PM

* PM considers new reforms on housing, regional spending

* Wage reform bill remains under debate in parliament

(Adds background)

By Andres Gonzalez

MADRID, June 28 (Reuters) - Spain will propose new reforms to set spending caps for its autonomous regions and protect indebted home owners from eviction in the final months before general elections in March, the prime minister said on Tuesday.

Spanish media have speculated Jose Luis Rodriguez Zapatero would not see out the current legislature and would call elections before the end of 2011 but the government said it wants to complete its reform programme before facing the ballot.

The Socialists trail the conservative Popular Party (PP) by double digits in opinion polls and suffered a humiliating drubbing at local elections in May.

“The government has undertaken, and will undertake, all the necessary reforms to improve competitiveness and stimulate growth,” Zapatero said in his last state of the nation address.

He has already said he will not be running for the prime minister’s position in 2012 after holding the post since 2004. The Socialists will face the elections headed by Deputy Prime Minister Alfredo Perez Rubalcaba.

New proposals, which Zapatereo said would be introduced in the next few weeks, include measures to protect homeowners at risk of eviction and a rule on autonomous regions’ spending.

The collapse of Spain’s housing sector in 2008 has left millions of homeowners struggling to pay mortgages, while heavily-indebted regions could threaten the government’s efforts to reduce one of the largest deficits in the euro zone.

“The government proposes finalising the reform processes in the last leg of its legislature ... It’s an intense work programme and more than enough for the months left,” he said.

There are 36 bills awaiting completion with parliament and further reforms will be added, he said.

Spain’s Parliament ratified the government’s pension sector reform, raising the retirement age, on Monday.

However, the more sensitive wage reform bill, unpopular with both unions and business heads, has been handed back to parliament and will be subject to open debate and amendments by legislators over coming months.

The government must also pass the 2012 budget, which must be given to parliament by end-September and ratified before the end of the year.

The state of the nation address focused on the economic crisis and Zapatero said he expected the economy, which has been in recession or near stagnant for three years, to gain pace in the second half of the year.

However, he forecast annual growth to be a few decimal places above 1.5 percent by the fourth quarter of this year.

The government’s official forecast for annual growth is 1.3 percent in 2011 after a 0.8 percent rise in the first quarter.

Zapatero said his government expects to meet its public deficit target of 6 percent of gross domestic product this year. (Additional reporting by Paul Day and Tracy Rucinski; writing by Paul Day; editing by Stephen Nisbet/Anna Willard)

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