Blood, debt and fears: crowds rise up as Spain agrees new €65bn cuts

 

Gijon

The Spanish Prime Minister, Mariano Rajoy, unveiled a fresh round of spending cuts totalling €65bn over two years at a noisy session of parliament yesterday. The measures represent the country's latest bid to convince financial markets that its public finances are in order and prevent a debt crisis spreading to the rest of the eurozone.

At the same time, hundreds of striking miners led a rally which stretched for miles along Madrid's main road in protest over cuts in subsidies they say will destroy Spain's coal industry.

The protesters tossed fireworks and clashed with riot police, who fired rubber bullets, as the unions vowed widespread action for the week beginning on 21 July. The demonstrations spread to the capital's parliamentary building and the headquarters of the governing conservative People's Party (PP).

At least one volley of rubber bullets was fired directly at miners, relatives and sympathisers as they gathered outside the Industry Ministry after marching up Madrid's main north-to-south street, the Castellana. The clashes with police and the rubber bullets sent people scurrying for safety.

"Today [Rajoy] has announced a new attack on the unemployed and public employees. They raise VAT, but not a single measure to make the rich pay, who caused this crisis," the leader of the Comisiones Obreras union, Ignacio Fernández Toxo, told the protesters.

The latest cuts are designed to get Spain's budget gap back to within a eurozone limit of 3 per cent of GDP by 2014, down from 8.9 per cent in 2011, and came a day after European Union ministers agreed to pump €30bn into the country's ailing banks – with more to come – and give the government another year to meet its deficit target.

Mr Rajoy did not immediately make clear how much of the cuts – equivalent to about 6.5 per cent of Spain's annual economic output – were in addition to €45bn of savings the government has announced since it took office in December.

Spain's income tax take has tumbled because one in four workers is on the dole and the economy is now in its fifth year of sluggish growth or recession, so the government now hopes to raise revenue by increasing the standard rate of value added tax to 21 per cent from 18 per cent, as expected, as well as introducing a new "green tax" on fuel.

To cut outgoings, the government will slash unemployment benefits, scrap a Christmas bonus for civil servants and axe 30 per cent of local councillors, as well as speed up plans to raise the retirement age to 67 from 65, amongst other measures.

Mr Rajoy has gone back on the PP's election campaign pledges by raising VAT and ditching tax breaks for new home buyers, just months after restoring them when it took power, but the premier said he had little choice if Spain were to balance its books.

"They are not pleasant measures but they are indispensable. We need to borrow money. We are locked in a circle and need to get out. We are at a crucial time that will determine our future," he told MPs.

The Socialist opposition leader, Alfredo Pérez Rubalcaba, said the measures were "unfair and ineffective" and Spain had surrendered control of its economic policy, but he offered to join forces with the government to draw up "a fair austerity plan to promote growth and generate confidence". Spain's benchmark borrowing cost, the rate it pays on its 10-year bonds, eased to about 6.6 per cent after Mr Rajoy's speech, from 6.8 per cent on Tuesday, but was still close to the 7 per cent mark at which Portugal gave up trying to sell bonds last year and asked for a bailout.

The miners rallied in Madrid on Tuesday after marching hundreds of miles from pits in the north of the country, where for weeks they have been engaged in underground sit-ins and blocking roads and railway lines.

Suggested Topics
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
business
News
Mick Jagger performing at Glastonbury
people
Extras
indybest
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SAP SD OTC Consultant | 12Months

competitive: Progressive Recruitment: SAP SD OTC Consultant | 12 Months | 500/...

Business Systems Analyst - London - £40,000 plus benefits

£35000 - £40000 per annum + substantial benefits: Ashdown Group: Business Syst...

Campaign Manager

£40000 - £55000 per annum + competitive: Progressive Recruitment: Campaign Man...

JQuery Developer (JQuery, C#, front-end, JQuery, UI, Tomcat)

£40000 - £45000 per annum: Harrington Starr: A Global Financial Service Organ...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil