Spanish government clears first hurdle towards approving 2018 budget

MADRID (Reuters) - Spain's government on Thursday cleared the first political hurdle towards approving the delayed 2018 budget after securing initial parliamentary backing from several political parties, including its rival Ciudadanos and regional groups.

The centre-right minority government of Prime minister Mariano Rajoy was forced last year to postpone the normal approval of the budget when the Basque Nationalist Party (PNV) withdrew its support to protest against Rajoy's handling of the secession crisis in Catalonia.

Although the PNV says it will not approve this year's budget until the central government's direct rule over Catalonia has been removed, it accepted to allow parliamentary proceedings to start after striking a deal with the government on boosting public pensions this year and next.

Rajoy will however have to tread a fine line to pass the budget bill.

Centrist party Ciudadanos, which has become a direct competitor for Rajoy's People's Party and is running high in opinion polls ahead of a national election due by June 2020, is piling pressure on the government to keep a tough stance on Catalonia and not accept further demands from the PNV.

Getting the budget through Spain's lower and upper houses can take around two months, meaning a final approval could take place during the second fortnight of June.

"We will keep working with the groups that have backed us towards a final approval... But with today's first step, I think we can be reasonably optimistic for the economy over the next few years," Rajoy told reporters in parliament.

(Reporting by Julien Toyer and Carlos Ruano; Editing by Angus MacSwan)