"I believe the moment has arrived to announce a general election... which will be held on November 20," Prime Minister José Luis Rodríguez Zapatero told a news conference on Friday.
Political commentators had widely speculated that the Socialists could take advantage of improved poll ratings and an uptick in summer employment data to call an early election.
The conservative opposition under Mariano Rajoy is widely expected to win the vote, but analysts say the only question is by what margin.
Spanish debt has been in the firing line in financial markets on the heels of a review for a possible downgrade from credit rating agency Moody's, which cited weak growth and out of control regional spending as key challenges for the euro zone's fourth largest economy.
However, economists are doubtful that an election alone, even if it creates a fairly stable new government, would calm down markets (see 'Positions').
Unpopular Zapatero has been considered a weak leader since he decided not to run again earlier this year, and the Socialists badly lost a May regional election.
Former Interior Minister Alfredo Perez Rubalcaba was subsequently named the Socialist candidate.
A survey by the Centre of Sociological Investigations conducted July 4 to 11 gave the Socialists, lead by Rubalcaba, an approval rating of 36% compared to the People's Party's 43.1%.
The poll results showed the Socialists had narrowed the PP's lead by 3 percentage points from the previous poll in April and since Rubalcaba announced he would run for prime minister.
According to the poll, 81.5% of those surveyed had little or no confidence in Zapatero.
EurActiv with Reuters
