Spain announces new austerity measures

Spain’s Prime Minister Mariano Rajoy giving a speech in 2011. Rajoy announced planned austerity moves amidst protests in Spain.
(Photo courtesy of Flickr user MAICOP)

EDITOR’S NOTE: Currencies are current as of 5:30pm CT July 11.

Spain’s government has announced new austerity measures to help the rescue of the country’s banks, in a deal with leaders of the European Union.

The plans announced by Prime Minister Mariano Rajoy July 11, led to clashes between police and protesters in the country’s capital Madrid, according to a report from the BBC. The plans include a rise in sales tax, from 18 percent to 21 percent and a suspension of bonuses for civil service workers during the Christmas holiday, with Rajoy telling the country’s parliament that the changes needed to be implemented without delay, according to the BBC. “I said I would lower taxes and I am actually raising them. Circumstances change and I have to adapt to them,” Rajoy said. “The excesses of the past are being paid for right now.” Rajoy added that citizens of Spain had not seen a recession like this before in the country’s history. The cuts proposed are to save about 65 billion euros ($80 billion).

The European Commission, in a briefing with reporters according the BBC, praised the work done by the Spanish government. “It’s an important step to ensure that the fiscal targets for this year can be met,” said Commission spokesman Simon O’Connor.

At the center of protests in Madrid, miners objected to the actions taken by the government. “It’s just cuts and more cuts,” miner David Menendez said in an Associated Press report obtained by the BBC. Many of the miners, the BBC report adds, have clashed with police as miners started walking from northern Spain in June in areas outside coal mines.

A bailout of 100 billion euros was agreed to in June, according to the BBC.