Madrid: Spanish Prime Minister Jose Luis Rodriguez Zapatero announced on Saturday that he will not stand as a candidate for his Socialist Party in the next general elections scheduled for 2012.
"I will not be a candidate in the next general elections," he said in a speech to the party`s Federal Assembly in Madrid. "Thank you for your respect and your affection."
The Prime Minister called on the Socialist Party "to begin the process of holding primaries" to nominate a new person to lead the party in the next elections.
He said that when he was first elected in 2004, he intended to remain head of government for only two terms and that this idea has not changed.
"I had thought about this seven years ago. Two terms is enough," he said.
The announcement follows weeks of speculation that the 50-year-old Zapatero might step down in favour of his Deputy Prime Minister Alfredo Perez Rubalcaba, 59, one of the most powerful figures in the government.
The Socialist Party has slumped in the opinion polls against the conservative opposition Popular Party of Mariano Rajoy as Zapatero attempts to push through painful austerity measures and labour market reforms to trim the public deficit.
The Spanish economy slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of the once booming property market.
The economy shrank 0.1 percent in 2010 and the unemployment rate ended the year at 20.33 percent, the highest level in the Organisation for Economic Cooperation and Development (OECD).
The government is seeking to reassure markets worried that its public deficit is unsustainably high and that the country could follow Greece and Ireland in seeking a debt bailout.
The Bank of Spain warned on Wednesday of slower-than-expected growth ahead and predicted the country would miss its key public deficit targets this year and next.