German Chancellor Angela Merkel arrived Thursday in Spain for an official visit during which she was expected to back the economic reforms undertaken by Prime Minister Jose Luis Rodriguez Zapatero's government, according to dpa. Merkel landed in Madrid accompanied by six ministers. She was then scheduled to meet King Juan Carlos and Zapatero at the Zarzuela royal palace. Merkel has been one of the strongest voices calling for economic reforms in Spain, which is feared to be a candidate to follow Greece and Ireland in needing an international bailout. "I know that very difficult things are being done" by Zapatero, Merkel told Spanish National Radio on the eve of her visit. "Prime Minister Zapatero has all my respects," she also said. However, Merkel was expected to urge Spain to do still more to guarantee its competitivity. The two leaders were meeting one day before a European Union summit was due to discuss the harmonization of economic and fiscal policies in Brussels. Zapatero described his summit with Merkel as "the most important" bilateral one in several years. He was expected to stress to the German leader that Spain - which suffers from a 20 per cent unemployment and high private debt levels - had "done its homework." One day before Merkel's visit, the government, trade unions and employers signed a "social pact" to endorse a reform raising retirement age from 65 to 67 years. The government is also carrying out a sweeping reform of the country's savings banks, has taken measures to make the labour market more flexible, and has cut public spending. The austerity measures are expected to trim the budget deficit from 9.3 per cent to about 6 per cent this year.
