Spain unveils mortgage relief plan for families

MADRID, Spain (CNN) -- Spain's socialist government will permit about a half-million families to delay some of their mortgage payments for two years in an effort to stimulate Spain's economy.

The relief plan, which Spanish Prime Minister Jose Luis Rodriguez Zapatero announced Monday, also aims to provide new job incentive measures to around 500,000 unemployed workers.

Zapatero's announcement came just after the European Union Commission confirmed that Spain is heading for recession next year, with the unemployment rate, currently at 11.3 percent, predicted to increase to 15 percent.

The government will guarantee the delayed mortgage payments, Zapatero said at a nationally televised news conference in Madrid.

The relief plan permits families in financial crisis, with mortgages up to €170,000 ($212,000), to delay half of their monthly mortgage payments, up to €500 ($625) per month.

The delays could start on January 1 and extend through December 31, 2010. After that, the families would have 10 years to pay back the delayed payments to the banks.

Zapatero also announced job-incentive measures, including €1,500 ($1,875) per year to businesses that create full-time positions for unemployed workers who are the principal breadwinners for their families.

The government would also pay the monthly social security benefit contributions for companies that hire full-time workers for research and development positions and in the renewable energy industry.

Another step would allow unemployed workers to get a lump sum up front from the unemployment office if they show that they will use it to create their own small business.

Zapatero said the job incentive measures would cost the government €170 million ($212 million) for the next two years.

The mortgage relief and job incentive measures will be approved this Friday by the prime minister's cabinet, Zapatero said.

"The first objective of the government I lead, in this difficult economic situation, is to support and be close to workers and families in need. Ours is a commitment with deeds," Zapatero said.

Last month, he announced aid to the nation's financial system to improve the flow of credit, making available up to €50 billion ($63 billion) to banks.

The government has insisted that the aid to banks was simply preventative, and that the nation's banks and financial system are sound, especially when compared with those in various other nations.

All About Spain • Jose Zapatero