MADRID (Reuters) - Spain's Socialists will not approve any budgets proposed by an incoming center-right government, the party's interim head said on Tuesday, highlighting how a policy deadlock could persist with a new administration.

Spain's parliament will vote on acting Prime Minister Mariano Rajoy´s bid for a second term this week to avoid a third election being triggered by an Oct. 31 deadline. The parliament speaker is expected to announce when the assembly will begin debating the vote later on Tuesday.

Although the Socialists agreed last Sunday to enable a new Rajoy-led minority government and end 10 months of political limbo by abstaining in a confidence vote, they have said they will not give it a free hand to pass legislation.

"In no event do we plan on giving stability to Rajoy's government or approving its budgets," interim head Javier Fernandez told reporters on Tuesday.


Rajoy's new government will have to find at least 5 billion euros ($5.43 billion) worth of cuts or revenues to meet its 2017 deficit target agreed with the European Commission.

Fernandez said Rajoy's conservative People's Party (PP) should find support from other parties to pass its budgets, given they need only a simple parliamentary majority -- more votes in favor than against -- to do so.

(Reporting by Tomas Cobos and Amanda Calvo; Writing by Angus Berwick; Editing by Adrian Croft)