Saturday, March 31, 2012

Spain announces cuts of 27bn euros to government budget a day after violence erupts on streets during strike

Spain announced deep cuts to its central government budget today as it battles to convince European partners and debt markets it can rein in its budget deficit.

The government said it would make savings of 27billion euros (£22.5billion) for the rest of 2012 from the central government budget, equivalent to around 2.5 per cent of gross domestic product.

The figure includes tax rises and spending cuts of around 15billion euros (£12.5billion) announced at the end of December.

The cuts come despite popular resistance - a general strike yesterday disrupted transport, halted industry and on occasion erupted into violence - and against a grim economic backdrop.

Spain is thought to have fallen back into recession in the first quarter and has the highest unemployment rate in the EU.

Deputy Prime Minister Soraya Saenz de Santamaria said: 'Everyone knows the difficult problem we face in this country, and it calls for special efforts in fiscal consolidation and structural reforms to grow and create employment.' Read More