Reuters: Market News: Spain's centre-right set to win key elections in Andalucia

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Spain's centre-right set to win key elections in Andalucia Mar 25th 2012, 11:25 Sun Mar 25, 2012 7:25am EDT * People's Party set to win key election in region of Andalucia * Region has over 30 pct unemployment, highly indebted * Win would see PP introduce healthcare, education cuts nationwide * Andalucia been in Socialist hands since 1978 By Nigel Davies SEVILLE, Spain, March 25 (Reuters) - Voters in Spain's economically troubled region of Andalucia were expected to hand a victory on Sunday to the centre-right People's Party, providing a boost for Prime Minister Mariano Rajoy as prepares to make deeper spending cuts to drag Spain out of the euro zone debt crisis. Opinion polls say the PP is likely to win in the country's most populous region with a full majority, grabbing the Socialists' last stronghold and allowing Rajoy's party to use its widening popular backing to push for cuts in education and healthcare spending nationwide. The smaller northern region of Asturias also holds elections on Sunday but no party was seen getting a clear majority, so either the Socialists or the PP will have to form an alliance with another party to govern. A solid victory in Andalucia, known for its olive oil industry and beaches, will put the PP in control of 12 of Spain's 17 autonomous regions and strengthen Rajoy's hand five days before he presents a budget that will deepen public spending cuts nationwide. In April Rajoy is expected to pass reforms allowing regions to cut health care and education spending, treasured social services that so far have escaped the austerity drive that Spain is pursuing as it tries to escape the euro zone debt crisis. The extent of public angst over cuts will be tested on Thursday when the country sees its first general strike since November 2010. After more than 30 years of Socialist governments that have ended in corruption scandals, voters in Andalucia say it's time to move on even if more cuts are imposed. "Andalucia needs a change. We've got to try it at least even if people are getting annoyed by the talk of more cuts to come," said Roberto Fernandez, a 41 year-old taxi driver going to vote in a local school in the cobbled and colourful streets in the centre of Seville on Sunday. He said he would vote for the PP after years of voting for the Socialists. YEARS OF OVERSPENDING Spain's regions account for around half of public expenditure and overseeing their spending after years of profligacy will be key to the central government meeting its tough deficit targets. Andalucia is one of the most indebted regions in the country relative to its output and has the highest unemployment rate of all at over 31 percent. It is reliant on more than 20 million visitors to its cities and beaches each year, as well as agriculture, to ease some of the domestic pain. The head of the PP in Andalucia, Javier Arenas, has promised to eliminate 50 percent of high level posts within regional and municipal government and shut down redundant public bodies. He also pledges to reform the health system but has not explained in detail how consumers would share the burden of medical costs. Talk of cuts to come in a region accounting for close to a fifth of the country's population could help the Socialists prevent the PP from winning an absolute majority, even if polls still show the PP on course to achieve it. Still, other surveys of public opinion show at least half of Spaniards support some spending cuts as the government tries to avoid needing a bailout like neighbour Portugal. Spain's regions must find savings worth around 15 billion euros to meet deficit-cutting requirements this year. Andalucia saw its income boosted during a decade-long property boom that began to unravel in late 2007. Since then construction has gone from representing close to 15 percent of the region's gross domestic product to around 11 percent, according to the National Statistics Institute. REGIONAL DOMINANCE A win in Andalucia, where bullfighting and flamenco music traditions are strong, would give the PP firm control over the country's regions, after winning many at last May's local elections. The north-eastern region of Catalonia, and the Basque Country in the north remain out of the PP's hand, but both have committed to slashing their deficit in line with the central government's policy. The likely victory in Andalucia, which represents just shy of 14 percent of the country's economic output, would leave the Socialists struggling and with its lowest level of institutional power since Spain returned to democracy in the 1970s. "The loss of Andalucia will be a huge blow for Socialist morale. The party's share of power has hit bottom," said Josep Lobera, research director at Metroscopia polling company. On Friday Socialist party head Alfredo Perez Rubalcaba, appealed again for Andalucians to back regional head Jose Antonio Grinan, when he said people would face severe cuts to prized public services should the PP win. But the Socialist cause could well be lost already, as voters concerns remain focused on sky-high unemployment and a accusations that a dozen leaders used benefits meant for struggling companies to help family and friends. Link this Share this Digg this Email Reprints

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