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Credit: Reuters/Miguel Vidal By Julien Toyer MADRID, Spain | Sun Oct 21, 2012 4:33pm EDT MADRID, Spain (Reuters) - Spanish Prime Minister Mariano Rajoy secured backing for his austerity drive in a vote in his home region of Galicia on Sunday, but a clear win for nationalist parties in the Basque Country could soon prove a headache for the central government. According to exit polls, Spain's ruling centre-right People's Party was set to retain its absolute majority and government in Galicia with 39 to 42 seats in the regional parliament compared with 18 to 20 seats for the Socialist Party and 15 to 18 seats for two nationalist parties. Opinion polls before the vote had indicated the PP would win 39 or fewer seats. In the Basque Country, the nationalist PNV (Partido Nacionalista Vasco) was set to win with 24 to 27 seats, compared with 23 to 26 seats for Bildu, a pro-independence party, 13 to 15 seats for the Socialist Party and 9 to 11 seats for the PP. The vote in Galicia, where austerity steps were taken by the People's Party even before Rajoy took national office one year ago, had been seen as a referendum on the Spanish government's handling of the euro zone crisis. The PP has ruled in the region for 24 of the past 31 years. European officials and analysts said Rajoy wanted to wait until after the election before requesting more European aid because he feared lenders' conditions, such as a reform of the pension system, could anger voters. The Spanish prime minister, who received a euro zone pledge in June of up to 100 billion euros to recapitalize banks, said on Friday he still had not decided whether to request a sovereign bailout. Senior euro zone officials told Reuters they expected an aid request to be made next month. The Galician result will give the prime minister some political breathing space after polls showing him losing support amid massive demonstrations against spending cuts in public services and successive tax hikes. The Socialists had hoped for a repeat of regional elections in Andalusia earlier this year where it lost to the PP but managed to form a coalition government with another left-wing party. But Sunday's results may re-open a leadership war in the Socialist Party, which ruled in Spain from 2004 to 2011. FRESH CHALLENGE In the Basque Country, the outcome of the vote, as expected, was influenced by central government attempts to reduce provincial power. Spain has fallen into its second recession since 2009 and the International Monetary Fund forecasts the economy will contract by 1.3 percent next year. Unemployment is 24.6 percent. But in the Basque Country and in Catalonia, where nationalist parties are also set to win regional elections on November 25, issues such as fiscal and territorial autonomy dominate the agenda. It is not yet clear who the Basque nationalist PNV will have to rely on to form a government. Political analysts said it may prefer to team up with the Socialist Party rather than with Bildu, which many see as linked to Basque separatist group ETA. Opposition parties have accused the government of using the crisis to claw back powers from Spain's 17 autonomous regions, whose overspending was partly to blame for the failure of the country to meet its deficit targets last year. The central government has offered funding to the regions in exchange for more control over local finances. So far, seven regions, including Catalonia, have said they would tap the liquidity line. The Basque Country is not expected to do so. (Editing by Ralph Gowling and Jason Webb) World Investing Simplified Spain Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. 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. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above. 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