Spain
is “recession- plagued”. Recessions being part of the normal
business cycle there is ipso
facto nothing to worry about - LOL
Spain
unveils new austerity under EU pressure
Recession-plagued
Spain unveiled new austerity measures on Wednesday designed to slash
65 billion euros (NZ$100b) from the public deficit by 2014 as Prime
Minister Mariano Rajoy yielded to EU pressure to try to avoid a full
state bailout.
26
April, 2012
The
conservative leader announced a 3-point hike in the main rate of
Value Added Tax on goods and services to 21 per cent and cuts in
unemployment benefits and civil service pay and perks in a speech
interrupted by jeers and boos from the opposition.
"These
measures are not pleasant, but they are necessary. Our public
spending exceeds our income by tens of billions of euros," he
told parliament.
Anti-austerity
protests in Madrid turned violent with police firing rubber bullets
at protesters who pelted them with stones, fruit, bottles and
firecrackers outside the industry ministry.
Tens
of thousands of demonstrators joined hundreds of coal miners who had
staged a long march from northern Spain in protest at cuts in mining
subsidies they say will put them out of work, as public discontent
over austerity measures grows.
Analysts
said the draconian savings plan, tearing up several of Rajoy's
campaign promises, showed Spain was already under de facto
supervision from Brussels even though it has not requested a
sovereign bailout and retains access to bond markets. Some said the
tax increases could exacerbate the recession.
Madrid
won softer deficit targets from its European Union partners this week
and also negotiated rescue aid of up to 100 billion euros from the
eurozone's bailout fund for its crippled banking sector.
In
line with demands from the European Commission, Rajoy announced new
indirect taxes on energy, plans to privatise ports, airports and rail
assets, and a reversal of property tax breaks that his Popular Party
had restored last December.
Keeping
one election promise, Rajoy did not touch pensions but he said he
would discuss with the Socialist opposition a change to the system
based on EU recommendations to link benefits to life expectancy.
He
also said the tax burden was being shifted from taxes on labour and
income to consumption and energy in line with European policy.
With
five years of economic stagnation and recession, unemployment at 24.4
per cent and tax revenue falling, Spain is struggling to reduce the
deficit after far overshooting its target last year.
The
high deficit and weak banks are now at the centre of the eurozone's
debt crisis as investors fret that Spain could join Greece, Portugal
and Ireland in needing a sovereign bailout.
Madrid's
borrowing costs have soared in recent months, with the yield on the
10-year government bond breaching the 7 per cent level regarded as
unsustainable in the long run. On Wednesday, that yield fell to 6.81
per cent.
"TO
AVOID BANKRUPTCY"
In
Brussels, the European Commission welcomed the new fiscal programme,
calling it an important step to ensure this year's fiscal targets are
met. In its annual assessment of the Spanish economy released in May
the EU executive had recommended most of the measures announced on
Wednesday.
"This
is a clear demonstration of the macroeconomic conditionality that we
had to accept in exchange for the banking aid and in exchange for
more time to cut the deficit to 3 per cent," said Santiago
Sanchez Guiu, economist at the Carlos III university in Madrid.
EU
finance ministers agreed on Tuesday to give Spain an extra year until
2014 to bring the public deficit down to 3 per cent of gross domestic
product and relaxed this year's goal to 6.3 per cent. However, a
Commission document said even the easier target would be difficult to
reach.
The
latest measures completely overhauled Rajoy's previous budget plan,
in which the central government and 17 autonomous regions had put in
place some 48 billion euros in savings for 2012, insufficient to
bring the deficit into line.
Rajoy
announced reforms to city hall governments, shutdowns of public
companies, reduced benefits for civil servants, budget cuts for
political parties and labour unions.
The
main civil service trade union responded by announcing work stoppages
in July and a possible strike in September. Small groups of public
workers protested outside parliament and the Popular Party's
headquarters, chanting: "This is not a crisis, it's a rip-off."
Representatives
of the key tourism and car industries said the sharp rise in Spain's
sales tax rates would cost billions of euros in lost earnings and
thousands of jobs.
The
prime minister, who had pledged not to raise VAT, said he now had no
choice. The main rate will rise to 21 from 18 per cent and the
reduced rate to 10 from 8 per cent in a step that could further
depress consumer spending. A government source told Reuters the
increase would take effect on August 1.
"We
are living in a crucial moment that will determine the future of our
families, our youth, our social welfare and all our hopes,"
Rajoy said. "That is the reality. We have to get out of this
mess and we have to do it as soon as possible."
MINERS
PROTEST
Analysts
criticised the lack of structural economic reforms but conceded that
the government had little room for manoeuvre.
"It's
not that much about measures to boost growth, obviously it will be
the contrary, but rather simply to avoid bankruptcy," said
Nicolas Lopez, director of analysis at M&G Valores in Madrid.
The
protesting coal miners, who had walked some 400 km (250 miles) from
the Asturias region over 44 days, were joined by thousands of
supporters, including labour activists, after receiving a hero's
welcome on marching into the capital during the night with lamps lit
on their helmets.
Public
anger over spending cuts has risen as school and hospital budgets
have been hit.
Manuel
Corte, a security worker from Asturias who joined the miners'
demonstration, called the new cuts a "disaster".
"I
thought all the previous cuts on medicines and pensioners and on
education were the worst possible thing but now..." he said.
With
more than half of young Spaniards without a job, the government said
unemployment benefit would fall to 50 per cent of previous earnings
from 60 per cent after the first six months on the dole. Rajoy said
the measure was intended to increase the incentive to look for work.
The
other side that you WON'T see reported in your newspaper (or TV news)
Over
70 injured as protesters clash with police in Madrid (PHOTOS, VIDEO)
RT photo
Riot policemen fire tear gas in Madrid, on July 11, 2012 (AFP Photo/Dominique Faget)
Spanish coal miners demonstrate on July 11, 2012 in Madrid (AFP Photo/Dani Pozo)
AFP Photo/Dominique Faget
AFP Photo/Dominique Faget
AFP Photo/Dominique Faget
AFP Photo/Dominique Faget
AFP Photo/Doni Pozo
A demonstrator raises his fist in front of riot policemen during a demonstration by Spanish coal miners in Madrid, on July 11, 2012 (AFP Photo/Dominique Faget)
Spanish coal miners demonstrate on July 11, 2012 in Madrid (AFP Photo/Cesar Manso)
RT photo
No comments:
Post a Comment
Note: only a member of this blog may post a comment.