×

Spanish parliament passes key first step of 2018 budget

MADRID, July 11 (Reuters) - Spanish lawmakers on Tuesday approved a new government spending limit for 2018, a first step in drawing up a budget for next year and improving conservative Prime Minister Mariano Rajoy's chances of seeing out his full term in office.

Since returning to power last October at the helm of a minority government, Rajoy has had to cobble together majorities in a fragmented parliament on a case-by-case basis to pass legislation.

He has so far managed to push through some key measures despite opposition from several left-wing parties, including a much-delayed budget for 2017. Passing a budget for 2018 would give his government further stability.

Members of Spain's lower house of parliament voted in favor of the new spending ceiling by just two votes, with 175 votes for, 173 votes against and one abstention.

The government raised the spending cap by 1.3 percent compared with 2017, to just under 120 billion euros ($137 billion), at a time when economic growth is motoring ahead for the fourth year running.

Spain's output is now seen growing 3 percent in 2017, after 3.2 percent growth in 2016 and up from a previous projection of 2.7 percent, according to official forecasts.

Rajoy's government got enough lawmakers on board to approve the spending cap after negotiations with regional parties, which had asked for less rigid deficit targets.

The Basque center-right Partido Nationalista Vasco (PNV) for instance backed the motion, though it said in a statement that this did not mean it would necessarily be in favor of the ensuing budget plan.

The budget for 2018 will be debated and negotiated over the summer, and will be voted on in parliament by the end of September. ($1 0.8770 euros) (Reporting by Sarah White and Inmaculada Sanz; Editing by Sonya Dowsett and Alison Williams)