Polling booths opened at 08:00 GMT and turnout is key to the result, particularly among young voters.
Many of these voters helped boost participation to 76 per cent in 2004 in outrage at what they saw as the then governing Popular Party’s efforts to cover up who was responsible for election-eve bombings that left 191 people dead.
Zapatero, then opposition leader, came from behind to win power on a wave of voter anger at the PP, which tried to blame the Eta Basque separatists for the bombings by Muslim radicals.
One of the key election issues has been the economy – one of Europe’s great success stories with more than a decade of robust growth. But it is now cooling amid rising unemployment and high inflation.
Observers say that an end to a boom in the construction sector, the strongest engine of growth, is to blame.
Economists said growth could fall as low as 2.0 per cent this year – a rate not seen since the early 1990s – from more than 4 per cent a year ago as a global credit squeeze chokes Spain’s already-cooling property sector.
The sector accounts for almost a fifth of Spain’s GDP and jobs. Unemployment, which hit a 29-year low last year, is up by almost 300,000 since June to 2.3 million.
Highly indebted Spaniards, already struggling to meet higher mortgage repayments, are suffering from rising food and fuel prices that pushed inflation to a record 4.4 per cent in February.
Many are also unsettled by an unprecedented influx of more than three million registered immigrants in the past eight years – most of them from Morocco, Eastern Europe and Latin America.
Both main parties clashed over immigration, with the conservatives saying Zapatero, 47, had made Spain a magnet for destitute foreigners in search of a better life, draining resources for schools and health care.
Mariano Rajoy, 52, the conservative candidate for prime minister, has vowed to make immigrants sign a contract obliging them to respect Spanish customs and learn the language. Zapatero’s party called this position xenophobic.
In two heated election debates, Rajoy repeatedly accused Zapatero of lying about his dealings with Eta during and after failed peace talks in 2006.
The candidates also clashed on Zapatero’s willingness to grant more self-rule to Spain’s semi-autonomous regions.
“All of these issues have left Spain deeply polarised. No matter who wins Sunday, the climate of confrontation will continue,” Enrique Monreal, 35, a publishing company employee, said outside a polling station.
“It will take several years for things to calm down. Right now it is so tense you are nervous even talking to your neighbour.”
The 2004 election upset ushered in four years of particularly bitter political confrontation focused on the train bombings, Eta, regional autonomy and Zapatero’s programme of liberal policies such as legalising gay marriage.
Analysts say a turnout of less than 75 per cent would harm the Socialists, and that a turnout below 70 per cent could even tip the scales towards a conservative victory.
The PP has openly acknowledged that it is trying to get left-wing voters to abstain.
In any case, neither of the two main parties are likely to be able to govern without some form of support from regional or leftist parties, with whom the Socialists have made ad hoc alliances over the last four years.
Source: News Agencies