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No more cuts expected in Zapatero's last state-of-the-nation debate

Prime minister will announce a series of measures to reactivate the economy

Prime Minister José Luis Rodríguez Zapatero is scheduled on Tuesday to appear for his last state-of-the-nation debate in Congress where he will propose a series of measures aimed at reactivating the economy and curtailing high unemployment.

According to sources close to the prime minister, Zapatero's plans do not include more cuts in public spending.

One of the major announcements will be to introduce flexible hours for businesses and retailers so that they can be open to the public on certain holidays. The International Monetary Fund (IMF) as well as the European Union and Organisation for Economic Co-operation and Development (OECD) have been pressuring Spain for some time to change the nation's current restrictive laws on business hours.

Zapatero will also inform lawmakers that his government still has a host of pending legislation he wants to push through before his term ends next year. In all, about 20 measures will be introduced over the year, including pension reform, several civil rights bills, and proposals designed to enforce greater transparency at government agencies and to speed-up criminal and civil trials.

Zapatero's last state-of-the-nation debate comes as the government is trying to ease the growing pressure from the markets over Spain's economic health. Outside investors, as well as the EU, are demanding that the prime minister make more cuts in public spending and push through a series of stricter reforms. It also comes as lawmakers from all the parties are feeling the heat from the scores of social protests organized by the 15-M Movement.

While Zapatero has declined to introduce harder measures for Spaniards, he has decided to make a big change to his monumental and controversial labor-reform package. The government has decided to give up one of its key aspects, which involved a plan to help companies pay for the costs of firing workers.

One year ago, Zapatero's government had proposed to create a public fund to help pay for worker's severance that, under certain circumstances, businesses could tap. But financial analysts had been skeptical about this plan, saying that it would cost the government a lot of money to keep up such a fund. Government officials are now agreeing. "Currently the conditions are not right to create this fund," say sources.