Expats living in Spain will be relieved that Spanish Prime Minister Jose Luis Rodriguez Zapatero has denied reports that Madrid is set to request a Greek style bail out from the European Union.

Zapatero yesterday described the reports as 'unfounded rumours'. He was backed by French President Nicolas Sarkozy who denied there was a problem with Spain's finances.

Zapatero said he is 'confident and calm with regard to the strength and solvency of the public accounts'. Data show the economy is recovering and jobless figures will improve, he added.

Talks between the Spanish prime minister and the International Monetary Fund today (Friday June 18) were set up a long time ago, his office confirmed, and will cover a wide range of issues such as Spain's stint as rotating president of the EU.

'What has appeared in recent days in the German press and other media over there being some sort of aid from the IMF or the European Commission, has been absolutely denied by the government, the IMF and the Commission,' said a spokesman.

Spain is implementing several simultaneous economic programmes to boost sluggish growth and rein in a burgeoning budget deficit. Cuts are not popular. Spain's two main unions have called a 24 hour general strike for September 29 to protest a government plan to overhaul the labour market.

It will be the country's first general strike since 2002 and the first since the Socialist government took power six years ago. The UGT and CCOO unions, which together have around two million workers, are angered by moves to make it easier and cheaper to fire workers as well as by government spending cuts and plans to raise the legal retirement age.

Spain plunged into its worst recession in decades at the end of 2008 following the collapse of a decade long property boom and only returned to tepid growth this year. The crisis has sent the unemployment rate soaring to more than 20%, the highest in the European Union after Latvia.

The high unemployment has in turn caused government spending on jobless benefits to skyrocket. That has pushed Spain's public deficit to 11.2% of gross domestic product last year, the third highest in the Eurozone after Greece and Ireland.