Spanish Prime Minister Jose Luis Rodriguez Zapatero has announced his government’s intentions to provide developers with a €3billion lifeline to help certain companies survive the economic downturn across the country.

Speaking at a press conference on Wednesday, Zapatero outlined his plans amidst severe criticism of his government’s handling of the country’s economic situation, which has left over 2.5 million people unemployed – the majority from Spain’s once booming property sector.

Under the plan, the government would provide struggling developers, unable to raise finance due to the large amounts of unsold stock and the credit crunch, financial assistance on the condition that they rent out their empty properties to middle and low-income earners for an as yet undisclosed period of time.

Zapatero also said that he would work to support the creation of new listed property companies to provide employment for a number of those left out of work as the sector struggles to cope with the downturn.

Last month, the Junta de Andalucia announced its plans to inject life back into the region’s property market, by promising cash-strapped real estate companies with a €10million individual line of credit to continue operations until liquidity is restored to the market.

Although Pedro Pérez, the secretary-general of G-14, an association of the country’s biggest listed property developers, welcomed the news, there have been critics who believe this amounts to interference and a correction will help restore a balance to the market.

“It must be clear that any governmental interference in the free market is disrupting the fair competition principle and thus forbidden,” said a spokesperson for Andalucian-based agency Finca Link SL. “Brussels will certainly interfere in this case and rightfully so. It has become time that Spain loses its ignorance towards European agreements, as they undersigned them and are profiting grossly off European aid and subsidies. As with the land-grab law, Spain now has being charged by the European commission at the European courts, this latter case will find the same result. Will Spain ever learn? And finally regions (independent or not) cannot be used anymore as an excuse not to uphold international agreements.” Source: OPP