Saturday

10th Dec 2016

Spain: €65bn more cuts, despite protests

  • Miners protest in Madrid (Photo: Antonio Rull)

Spain has announced a drastic series of spending cuts and tax increases in the face of an ultimatum by the EU, as the country struggles to reduce its deficit while negotiating a bailout for its banks.

"These are not pleasant measures but they are necessary," Prime Minister Mariano Rajoy told parliament referring to a programme designed to bring in €65 billon in savings by the end of 2014.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"We have very little room to choose. I pledged to cut taxes and now I’m raising them. But the circumstances have changed and I have to adapt to them," he addded, according to Bloomberg.

The measures include a hike in valued added tax from 18 to 21 percent, a reduction in unemployment benefits and a reform of the public administration.

The move is an attempt by Madrid to reassure markets and bring its borrowing rates down to more sustainable levels.

It is also part of a quid pro quo deal with its eurozone partners, which have given it an extra year to bring to its deficit to below the three percent of GDP required by EU rules.

It is expected to reduce its budget to 6.3 percent this year, to 4.5 percent in 2013 and to 2.8 percent a year later.

"This is a challenging but achievable objective," said EU monetary affairs commissioner Olli Rehn said at the beginning of the week, while noting that Madrid will have to commit to the "rapid adoption of additional measures."

The deeper cuts raises the question of whether Spain will be pushed further into recession.

When asked about this directly after the Spanish announcement, Rehn's spokesperson said the commission would first have to analyse the proposals.

The new cuts have caused anger among many of Spain's citizens, with the country already suffering from a high unemployment rate, particularly among its youth.

On Wednesday, thousands of miners made their way to Madrid to protest the government. They were joined in the Spanish capital by anti-austerity demonstrators.

Madrid is also in the process of negotiating a deal for its banks, which may need up to €100 billion in outside help.

A political agreement for the terms of the capital injection was struck by Spain's euro partners on Monday and is expected to be formalised on 20 July.

While a bank stress test has to be completed in autumn before the final sums of money for Spain's banks are known, €30 billion will be available from the eurozone at the end of July.

EU public lacks voice on banking laws

The complexity of financial laws and lack of NGO resources means the “man in the street” has little say on EU banking regulation, the EU Commission has warned.

News in Brief

  1. Council of Europe critical of Turkey emergency laws
  2. Italian opposition presses for anti-euro referendum
  3. Danish MP wants warning shots fired to deter migrants
  4. Defected Turkish officers to remain in Greece
  5. Most child asylum seekers are adults, says Denmark
  6. No school for children of 'illegal' migrants, says Le Pen
  7. Ombudsman slams EU Commission on tobacco lobbying
  8. McDonald's moves fiscal HQ to UK following tax probe

Stakeholders' Highlights

  1. Swedish EnterprisesHow to Use Bioenergy Coming From Forests in a Sustainable Way?
  2. Counter BalanceReport Reveals Corrupt but Legal Practices in Development Finance
  3. Swedish EnterprisesMEPs and Business Representatives Debated on the Future of the EU at the Winter Mingle
  4. ACCASets Out Fifty Key Factors in the Public Sector Accountants Need to Prepare for
  5. UNICEFSchool “as Vital as Food and Medicine” for Children Caught up in Conflict
  6. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election
  7. CESICongress Re-elects Klaus Heeger & Romain Wolff as Secretary General & President
  8. European Gaming & Betting AssociationAustrian Association for Betting and Gambling Joins EGBA
  9. ACCAWomen of Europe Awards: Celebrating the Women who are Building Europe
  10. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  11. ECR GroupRestoring Trust and Confidence in the European Parliament
  12. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First