Spanish PM calls early election

29 July 2011 Last updated at 14:58 GMT PM Zapatero has presided over a series of unpopular austerity measures Spanish Prime Minister Jose Luis Rodriguez Zapatero has called a general election for November, four months earlier than expected.

He said this would enable a new government to confront Spain's economic problems from January.

Hours earlier, a credit rating agency warned it might downgrade Spain's rating due to weak growth prospects.

The opposition has demanded an early vote since May, when Mr Zapatero's Socialist Party lost in local polls.

"Early elections are what the majority of the electorate wanted, so this is good news," said Mariano Rajoy, the candidate of the main opposition Popular Party.

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I want a new government to take control of the economy from 1 January next year... fresh from the balloting”

End Quote Jose Luis Rodriguez Zapatero It argues that a change of government is the only way to recover market confidence in the country.

Mr Zapatero will not be seeking a third term as prime minister, and opinion polls suggest his Socialist Party - led by former Interior Minister Alfredo Perez Rubalcaba - will lose.

Economic recovery?

The government's borrowing costs have risen in recent weeks, despite agreement on a second EU bailout package for Greece, reflecting the fact that investors still worry about the weak state of Spain's economy, says the BBC's Sarah Rainsford in Madrid.

Mr Zapatero said he was calling an early election - now set for 20 November - in order to "project political and economic certainty" over the months to come.

"I want a new government to take control of the economy from 1 January next year... fresh from the balloting."

He made his announcement after a speech in which he stressed that the economy was on the road to recovery, citing seven consecutive quarters of growth, and a recent decline in unemployment.

But 46% of young Spaniards remain out of work - and the overall unemployment rate is twice the European average.

There is concern too over the level of debt in Spain's regions, and the health of the banking sector, our correspondent says.

The international ratings agency, Moody's, has just warned that it is putting Spanish government debt on review, for a possible downgrade from Aa2 to Aa3.

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Moody's warns over Spanish rating

29 July 2011 Last updated at 14:48 GMT Spain is continuing to see a number of protests about spending cuts and high unemployment Moody's has warned it may downgrade the credit rating of Spanish government bonds, saying last week's second rescue package for Greece had done little to ease debt concerns in the eurozone.

The rating agency said it was reviewing Spain's current Aa2 grade, adding that if it was downgraded, it would probably be by just one level, to Aa3.

Moody's added that the Spanish economy remained "subdued".

The Spanish government has now called an early general election.

The announcement was made just hours after Moody's made its credit rating warning, and will see Spain go to the polls on 20 November.

Explaining the decision, Prime Minister Jose Luis Rodriguez Zapatero said he wished to "project political and economic certainty" over the months ahead.

However, it could be benefit the opposition conservative Popular Party, as it is ahead of the ruling Socialist Party in the polls.

The government could have waited until March of next year to hold the general election.

'Bond precedent'

In explaining why it was reviewing Spain's credit rating, Moody's highlighted the fact that as part of the second bail-out deal for Greece, private bondholders were being invited to participate.

Continue reading the main story Sarah Rainsford BBC News, Madrid

This is another blow to Spain - anxious to convince investors it won't need a Greek-style bailout. But Moody's still has concerns, so it has put Spain on review, for what's likely to be a one-notch downgrade of its government debt.

The ratings agency points to the slow pace of economic growth here, and the high levels of debt in Spain's autonomous regions. They account for almost half of state spending and several warn they'll overshoot the budget deficit target set by Madrid.

The Prime Minister, Jose Luis Rodriguez Zapatero, has insisted that won't affect his target of cutting Spain's overall deficit to 6% by the end of the year. But investor doubts, coupled with concern over the details of the latest bailout for Greece, has already pushed Spain's borrowing costs higher and higher.

The Prime Minister has now announced an early general election for November; the main opposition party has long insisted a change of government is the only way to recover confidence in this economy.

The private bondholders, such as banks, are being asked to exchange their current Greek bonds for ones which pay a lower rate of interest over a longer term.

Moody's said this set a "precedent", adding that it had "signalled a clear shift in risk for bondholders of countries with high debt burdens or large budget deficits".

However, if Spain is downgraded to Aa3, this remains a healthy investment grade.

Moody's also said five Spanish banks could have their credit ratings downgraded because of the same concerns.

These include the largest two lenders, Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA).

'Fiscal slippage'

Despite the forthcoming general election campaign, Spain's central government is continuing to enforce cost-cutting efforts to reduce its public deficit.

However, Madrid is hampered by the fact that Spain is a heavily devolved country, and its regional governments, such as those in Catalonia and the Basque region, are not moving as fast or as deep in trimming their spending.

Moody's highlighted this problem, warning of "fiscal slippage" at the regional and local government level.

Spain is also struggling with the eurozone's highest unemployment rate, which now stands at 20.9%.

Spain's main share index was down 0.7% in afternoon trading, after falling as much as 2.4% immediately following Moody's announcement.

The yield on the Spanish government's 10-year bonds rose 10 percentage points to 6.10%.

The euro declined, falling 0.3% against the dollar to $1.4287.

"The trigger is that the [Greek] deal last week has not really rebuilt confidence across the eurozone, so Spain is still on their radar screens with costs rising," said Giada Giani, analyst at Citigroup.

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Spanish war 'drew 4,000 Britons'

28 June 2011 Last updated at 01:58 GMT Hundreds of Britons who went to fight in the Spanish Civil War never returned, experts say Hundreds more Britons went to fight fascism in the Spanish Civil War in the 1930s than had previously been thought, newly released files show.

MI5 recorded the names of about 4,000 people from Britain and Ireland suspected of travelling to join the war, National Archives files show.

The previous estimate stood at about 2,500. Many volunteers were communists and of interest to MI5.

One name on the list is Eric Blair, better known as author George Orwell.

His experiences in the Spanish Civil War were documented in his book Homage to Catalonia.

The details of those who had joined the fight against General Franco's forces between 1936 and 1939 continued to be updated by security service MI5 up until the mid-1950s.

The record for Orwell covers the period in which he published the bestselling novels Animal Farm and Nineteen Eighty-Four, until his death in January 1950.

The files, which can be downloaded free for a month, comprise more than 200 pages detailing the movements of the men and women who left British ports for the Spanish front line - as well as a "roll of honour" of some of those killed in action.

James Cronan, the National Archives' diplomatic and colonial records specialist, said it was not clear how many of those who left actually reached Spain, but he added that "we know that hundreds never returned".

"The International Brigades and associated militia brought volunteers together from all over the world in defence of democracy but few, if any, records exist of their service," he said. "That's why uncovering a document like this is so exciting."

This year marks the 75th anniversary of the start of the war in July 1936.

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