MADRID, August 14, 2008 (AFP) - Spain's cabinet ministers interrupted their annual holidays on Thursday to approve a fresh package of 24 measures aimed at reviving a rapidly deteriorating economy as official data showed growth all but stalled in the second quarter.

'The government is working to make sure that the economy recovers as soon as possible,' Prime Minister Jose Luis Rodriguez Zapatero, wearing a dark suit and black tie, told reporters after the measures were approved at the meeting.

The government normally has no cabinet meetings during August when most Spaniards traditionally take their summer holidays.

Among the measures approved by the socialist government is the simplification of environmental plans for public works, the abolition of the wealth tax and cutting red tape for small and medium-sized businesses.

Zapatero said environmental assessments of public works projects will now take a maximum of six months to be carried out compared to an average of 770 days. There are over 3,000 projects awaiting an assessment, he added.

Spain has until recently had one of the world's fastest growing developed economies, posting an expansion of 3.8 percent last year.

But its economy, the fourth-biggest in the eurozone, has been slowing down as the impact of an abrupt end of a decade-long property boom, due to rising interest rates and the international credit crunch, spreads to other sectors.

Output expanded 0.1 percent from 0.3 percent in the previous three months as domestic consumption weakened further, according to preliminary figures released earlier Thursday by national statistics office INE.

On a 12-month comparison, gross domestic product (GDP) grew by 1.8 percent in the three months to June after 2.7 percent in the first quarter of 2008, its lowest level in over a decade.

The country is especially vulnerable to higher borrowing costs because the vast majority of mortgages have variable interest rates and the property sector accounts for a much larger share of the economy then in the rest of Europe.

The European Central Bank has raised the base rate nine times since December 2005.

Zapatero stressed that the Spanish economy, while struggling, was still outperforming its European peers.

The eurozone's three largest economies -- Germany, France and Italy -- all contracted in the second quarter.

The eurozone economy contracted for the first time ever in the second quarter, with output falling 0.2 percent, the European Union's statistics office Eurostat said earlier Thursday.

The Spanish government's new measures are in addition to an 18-billion-euro spending plan announced in April, which includes income tax rebates and funding for public works, aimed at reviving the economy.

The government hopes the measures will bring economic growth back to around 3.0 percent in 2010.

But the conservative opposition and media have accused Zapatero, who was re-elected to a second term in March, of being too slow to take action on the economy.

'Another smokescreen against the crisis,' right-wing daily wrote in the headline to its lead editorial which dismissed the government's extraordinary cabinet meeting as a publicity stunt.

Last month the government slashed its economic growth forecast for this year and the next from 2.3 percent to 1.6 percent in 2008 and 1.0 percent in 2009.