SPAIN PASSED an austerity package yesterday, but by just one vote:

The bill was only saved when 10 deputies from center-right Catalan nationalists CiU abstained after criticizing the bill, saying they did not want Spain to be plunged into a Greek-style crisis.

But CiU said they would not support the 2011 budget bill, Spanish news agencies reported, raising doubts over how Prime Minister Jose Luis Rodriguez Zapatero will be able to continue to steer his country through a time of crisis.

CiU leader Josep Antoni Duran i Lleida told parliament Zapatero should call early elections next year.

"The problem is you and your government," he told Zapatero.

Damn right. I had never seen Zapatero more beaten as I saw him yesterday. He was getting big punches from all parties, both at his right and at his left. Take a look at how he, and other cabinet members, looked during the debate (click to enlarge)

Ain't that a group of happy, shiny people, or what?

Looks like Spain is heading for a snap election at the beginning of 2011, if not earlier.

UPDATE. More at the NYT:

The tight vote in Spain, coupled with the prospect of greater labor unrest after a warning on Thursday from the main unions that they might call a general strike, suggested that Mr. Zapatero was unlikely to maintain enough political support to push through next year’s budget, some analysts said.

Mr. Zapatero, whose second term is to end in 2012, already requires support from some smaller parties to pass legislation because his Socialist Party does not have a majority.
 
One smaller party, Convergence and Union, a regional Catalan party, abstained from the vote on Thursday and demanded that Mr. Zapatero call early elections, warning that it would not support the government’s 2011 budget.
 
“The government is now like a boxer who is stuck in the corner and getting punched from all sides, and I believe that the knockout is very near,” said Sandalio Gómez, a professor of economics and labor relations at the IESE Business School, University of Navarra.
 
“The beating that it received today,” he added, “is a huge demonstration of its loss of authority.”
Josep Antoni Duran i Lleida, who spoke on behalf of lawmakers from the regional Catalan party in Thursday’s parliamentary debate, told Mr. Zapatero that his time in office was “finished.” The spokesman said his party had decided to abstain from the vote only because “I don’t want Spain to be intervened like Greece.”
 
The Popular Party, meanwhile, justified its opposition because of what its leader, Mariano Rajoy Brey, said was an austerity package that would “fall upon the weakest layers of our society.”
 
[...] Investors, however, may not wish for further uncertainty linked to possible elections and a resulting change in government at a time when Spain is already struggling to meet its euro commitments.

Furthermore, “early elections may very well dampen the momentum for reform because a Socialist government has at least a better chance of getting union support for changing labor market rules than a center-right government would,” said Luis Arenzana, managing partner of Shelter Island Capital Management in Madrid. “This is all about aiming for what is possible rather than what is desirable.”

“And I don’t think anybody in financial markets sees Rajoy as the next Margaret Thatcher,” he added, referring to her campaign against British labor unions in pushing through reforms after her election as prime minister in 1979.