Wednesday, 11 July 2012

Spain Piles On Austerity Measures

THE WALL STREET JOURNAL: MADRID—Spanish Prime Minister Mariano Rajoy announced new austerity measures Wednesday that should help Madrid cut its budget deficit by €65 billion ($80 billion) through to 2015, and warned the euro-zone's fourth-largest economy may not grow at all next year.

In an impassioned address to parliament, Mr. Rajoy called on all Spaniards to back the measures, which include a value-added tax hike to 21% from 18% and cuts to jobless benefits and public sector wages, saying Spain's economic situation is "extraordinarily serious."

The measures were swiftly welcomed by the European Commission, the executive branch of the European Union. But analysts said the moves would hurt Spain's recovery from recession and may not save the country from needing a full-fledged financial bailout on top of a plan to support its struggling banks with up to €100 billion in EU loans.

As Mr. Rajoy spoke during a six-hour parliament debate on austerity, hundreds of coal miners and their supporters rallied in Spain's capital against government plans to end subsidies for their sector. Some protesters threw rocks and firecrackers at police, the latest sign of growing social unrest in a country mired in an unprecedented, five-year-long crisis. » | Davíd Roman and Nicholas Winning, with contributions from Ilan Brat and Dan Strumpf | Wednesday, July 11, 2012