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Edition: U.S. Article Comments (0) Email Print Reprints Full Focus Editor's choice A selection of our best photos from the past 24 hours. Full Article Read Saudi royal gets life in jail for London murder 8:43am EDT Morgan Stanley slips behind Goldman with surprise loss 11:13am EDT Richards: Mick Jagger was "unbearable" 15 Oct 2010 Britain slashes spending, raises retirement age | 11:39am EDT Analysis: Rare earths give China an edge in Japan ties | 11:37am EDT Discussed 114 Wall St blames homeowners in foreclosure fiasco 113 U.S. is currency war’s ”tomb maker”: China economist 112 U.S. judge allows states’ healthcare suit to proceed Watched Russian spy poses for Maxim Tue, Oct 19 2010 Red faces over top model gaffe Tue, Sep 28 2010 Rare public appearance Sun, Oct 17 2010 Spain PM acts to strengthen government with reshuffle Tweet This Share on LinkedIn Share on Facebook Related News Analysis: Zapatero's cabinet swap aims to boost support 9:56am EDT Analysis & Opinion An ironic twist in fiscal policy Related Topics World » Spain's Economy Minister Elena Salgado (bottom C) is applauded by her fellow Socialist party members after voting to pass the 2011 budget at Spanish Parliament in Madrid October 20, 2010. Credit: Reuters/Sergio Perez By Sonya Dowsett MADRID | Wed Oct 20, 2010 10:23am EDT MADRID (Reuters) - Spain's Prime Minister Jose Luis Rodriguez Zapatero overhauled his cabinet on Wednesday, aiming to strengthen his unpopular government while battling to tame a massive public deficit and revive a stagnant economy. Interior Minister Alfredo Perez Rubalcaba, who has a high approval rating and is seen by some as a successor to Zapatero, becomes the new deputy prime minister in the biggest reshuffle since the Socialists came to power in 2004. "It's time for another kind of political action, a different direction and drive from the government," Zapatero said in a speech announcing five cabinet changes on top of Rubalcaba assuming the extra role, and the closure of two ministries. Spaniards suffering budget cutbacks, salary reductions and the highest unemployment rate in the euro zone have punished the government, whose approval ratings have sunk below 30 percent. Zapatero recently wrapped up deals with two minority parties to pass a 2011 budget with deep spending cuts, aimed at assuring investors that Spain can trim its deficit which ballooned out of control after stimulus measures to stave off a grim recession. If he had not found the votes he could have faced early elections, which polls show he would lose by almost 15 percentage points to the center-right Popular Party. His term is scheduled to end in 2012. HEIR APPARENT Rubalcaba heads the government campaign against Basque separatist group ETA, which is widely seen as successful due to a string of arrests of the group's leaders. "He's the heir apparent," said Pedro Schwartz, an economist at San Pablo University in Madrid. "He's intelligent and efficient and he does reinforce the government." Zapatero made no changes at the Economy Ministry, run by Elena Salgado, who implemented the tough austerity measures brought in after investors punished Spain's sovereign debt on concerns the country was moving toward a Greek-style bailout. Any changes in the Economy Ministry at this difficult time could create uncertainty and spook financial markets, said Luis Miguel Doncel, economy professor at the Rey Juan Carlos University in Madrid. The 2011 budget slashes ministry spending and includes tax increases to reduce one of the euro zone's largest public deficits to 6 percent of gross domestic product next year from 11 percent last year. The government has stuck with its austerity plan even while recognizing that spending cuts will make it hard for economic recovery to take off. The economy is expected to grow only 0.4 percent next year, according to experts surveyed by Reuters [ID:nLDE69620Z], well below the official forecast of 1.3 percent. Although spending cuts have hurt the government's popularity at home, they have boosted confidence among investors who now view Spain as less risky than peripheral euro zone economies such as Portugal and Ireland. 1 2 Next World Add a Comment *We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language or appear to be spam and review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. © Copyright 2010 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Reader Feedback Mobile Newsletters RSS Podcasts Widgets Your View Analyst Research Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts Venture Capital Journal International Financing Review Project Finance International PEhub.com PE Week FindLaw Reuters on Facebook Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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