Madrid  - Spanish Prime Minister Jose Luis Rodriguez Zapatero on Wednesday admitted that the country's economy was facing "hard and complicated" times, but stressed its resilience and capacity to cope.

The economy was "practically stagnant," Zapatero admitted on explaining economic policy to parliament, and called for a collective effort to deal with the difficulties.

The inflation, now running at 5.3 per cent, would drop under 4 per cent by the end of the year as oil prices went down and consumer confidence increased, the premier predicted.

Spain is facing a sudden economic slowdown after more than a decade of continuous growth. Analysts attribute the crisis mainly to the collapse of the key construction sector and the international economy.

Zapatero announced new measures to favour the recovery of the property market, including the authorization to create listed investment companies in the real estate sector and a new line of credits to boost the offer of rented housing.

Conservative opposition leader Mariano Rajoy accused the Socialist government of having hidden the country's economic problems in the run-up to the March elections, and of downplaying them now.

With unemployment now having surpassed 10 per cent, several car makers announced new job cuts, press reports said.

General Motors was to trim 600 of a total 7,500 jobs at its factory near Zaragoza, while Ford announced a temporary reduction of up to 1,300 employees in a total of 7,000 in Valencia.

The Volkswagen subsidiary Seat was to reduce its production of the Altea and Leon models by 300 cars daily.

Sales of private cars dropped by 41 per cent in Spain in August compared to the same month in 2007. The car makers also justified the production and job cuts with a plunge in European demand.

The likely closure of the charter airline Futura was also expected to kill 1,200 jobs, the daily El Mundo said. The carrier, which has sought bankruptcy protection, will be denied an operating licence if it is unable to present an economic recovery plan to the government. (dpa)