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Eurozone crisis: Spain announces budget cuts amid protests

Spain’s government has announced sweeping new austerity measures, amid clashes between protesters and police.

Prime Minister Mariano Rajoy said sales tax would rise from 18% to 21%, and local authorities would have their budgets slashed. He is aiming to save 65bn euros (£51bn; $80bn) as part of a deal with eurozone leaders to help rescue Spain’s banks.

The move coincided with a miners’ rally in Madrid, where police fired rubber bullets at crowds of protesters. Thousands of people joined in the rally to support the miners, who have been campaigning for weeks against major cuts to industry subsidies. Witnesses said protesters out to support the miners threw fireworks, bottles and stones at riot police.

The officers fired rubber bullets and charged at the demonstrators.

Five people were arrested and three people suffered minor injuries, according to the AFP news agency.

‘Circumstances change’

The prime minister, interrupted several times by opposition MPs, told parliament that the changes he was announcing had to be adopted without delay.

Eurozone finance ministers have agreed to provide 30bn euros (£24bn) for Spain’s troubled banks by the end of the month and to give Madrid an extra year – until 2014 – to hit its budget targets.

Mr Rajoy acknowledged that the VAT rise contradicted a campaign pledge made before his Popular Party came to power. As recently as January he said there was no plan to raise the tax.

“I said I would lower taxes and I am actually raising them. Circumstances change and I have to adapt to them.”

The package of measures would cut the budget by 65bn euros over two-and-a-half years, he said.

“The excesses of the past are being paid for right now,” he said, adding that Spaniards had never before experienced such a recession.

Rajoy’s austerity plans:

VAT increase from 18% to 21%
Rise in reduced VAT rate on public transport, hotels and processed foods from 8% to 10%
Basic goods VAT on bread, medicine and books stays at 4%
Christmas bonuses suspended for public sector workers
Unemployment benefit cut from sixth month out of work
30% cut in councillors in some areas
Subsidies to be cut by 20% in 2013 for political parties and unions

Read the full story on BBC News

Category: World News |

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Last updated October 26, 2016 at 10:54 PM
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