Spain turns to private sector to ease the pain of economic strain

Spain is to sell a 30 per cent stake in its national lottery and partially privatise airports in Madrid and Barcelona to ease market worries about public finances.

Prime Minister Jos Luis Rodriguez Zapatero, right, made the announcements yesterday after the country suffered at the hands of investors who fear it may need a bailout.

The government will also stop paying 420 euros (351) per month in February to people whose unemployment benefits have expired.

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Ministers hope the moves will convince investors Spain is taking strong steps to stabilise the eurozone's fourth largest economy so it will not need outside help.

Madrid's stock index, which had lost nearly 15 per cent in November, jumped 4.5 per cent on the news.

European Union Competition Commissioner Joaquin Almunia also welcomed the reforms.

"Very positive, they are extremely welcome. They are necessary, show the government's determination and they are in the right direction," he said.

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Mr Zapatero said the measures will allow private investors a 49 per cent stake in Spanish airports. The government hopes to raise 9bn euros (7.5bn) from the operation. Management of Madrid's Barajas and Barcelona's El Prat airports will be leased out.

About 40,000 small and medium-size companies are expected to benefit from the tax cut.

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