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Rajoy hints at drastic cuts if he wins elections

"We will have a welfare state we can afford," says PP chief

Just two days after Mariano Rajoy called on elected officials in the Popular Party to cut back on public spending, the opposition leader suggested on Friday that if he wins next year's prime ministerial race, there could be drastic cuts in social services.

Speaking in Sitges, where he took part in a question-and-answer forum with a group of businessmen, Rajoy said that public spending must be scaled back while at the same time he advocated changes to the Constitution that would prevent governments from racking up deficits.

Prior to addressing the Círculo de Economía forum, US economist Joseph Stigliz, who won the Nobel Prize in 2001, argued that excessive cuts in public spending could lead to economic stagnation similar to that seen in Greece. But Rajoy was firm in his convictions.

"We will have a welfare state that we can afford," he said. "An African nation may want to have a large welfare state but cannot. If we reactivate the economy and create jobs, then more taxes will be paid and we will have a welfare state. And we will have one to fit our means. As I said before, I would like to maintain public health and pensions ? that is the red line. But I think that coming up with a global package mixed with an austerity plan will be good."

In Castilla-La Mancha, PP officials say there is no money to pay the regions 70,000 public servants from next month, because the situation is one of "total bankruptcy." Regional party secretary general Vicente Tirado said the government owes some 2 billion euros to suppliers and accused outgoing Socialist premier José María Barreda of being "irresponsible."