30/03/2012 Spain (KMC) - Spain’s most austere budget of the post-Franco era has been revealed today by the Partido Popular government led by Mariano Rajoy. The budget consists of €27.3 billion in cuts and tax rises and a freeze on public sector pay. Government spending will be reduced by 16.9 per cent which is two percentage points more than what was previously indicated.
However there is good news for Spain’s unemployed and its pensioners as unemployment benefits and public pensions as well as value added tax were left untouched.
“Our first objective is to achieve healthy public finances, but not at any price,” said Soraya Sáenz de Santamaria, Deputy Prime Minister. “We have to support those who are in most need, and not slow down the necessary recovery”.
From April 1, electricity bills for consumers will be increased by 7 per cent as the government attempts to tackle a €24bn electricity tariff deficit caused by the difference in state set consumer prices and costs for producers.
Spain is committed to reducing its budget deficit from 8.5 per cent of gross domestic product in 2011 to 5.3 per cent by the end of 2012.
This reduction has been agreed with the European Union and the austerity measures announced today are another way of reassuring Europe that Spain will meet the deficit target.
Before the budget announcement Luis de Guindos, Spain’s Finance Minister, said:
“We are convinced that Spain will no longer be a problem, especially for the Spanish, but also for the European Union.”