Spain plans to abolish tax breaks for some home buyers in a bid to spur house purchases before the change comes into effect, Prime Minister Jose Luis Rodriguez Zapatero said as he announced a raft of measures to haul the country out of its worst recession in 60 years.

Zapatero, a Socialist, also announced a tax cut for small companies that maintain staff levels, €2,000 ($2,731) in incentives for each new car purchased, and €1bn in government-spending cuts to curb a rising budget deficit. He announced the measures today in Parliament in Madrid.