Mon, Jul 16, 2012 - Page 15 News List

Spain readies for cuts that will hit jobless benefits

TRUTH HURTS:In spite of the austerity measures’ wide reach, Spain will still be left 8.6 billion euros short and is in desperate need of the 30 billion the EU is set to loan it


Government employees take part in a demonstration organized by unions in Madrid, Spain, on Thursday, against the government’s welfare cuts.

Photo: AFP

Spain’s new austerity plan will claw back 56 billion euros (US$69 billion) for the country between now and 2014, according to figures published on Saturday by the Spanish Ministry of Economy and Finance.

That figure excluded the effects of a planned energy and environment tax, the document said, which was published on the ministry’s Web site.

“The estimated impact of these measures is approximately 13.5 billion euros in the remainder of 2012, 22.9 billion euros in 2013, and 20 billion euros in 2014,” the English-language document said.

That total of 56.4 billion euros set out in the document still leaves a shortfall of some 8.6 billion euros if the government is to make the 65 billion euros in cuts required by the EU.

Recent press reports have suggested that this sum will come, at least in part, from a sharp rise in electricity bills for industry and households.

Saturday’s ministry statement said only: “This calculation excludes the valuation of the impact of further measures, including energy and environmental taxation, which will be announced at a later date.”

This week Spanish Prime Minister Mariano Rajoy — obliged by the EU to order new cuts and tax increases to meet deficit-cutting commitments — revealed Spain’s new 65 billion euro austerity package.

The measures included a sales tax rise, lower jobless benefits, and public sector pay cuts. The government approved the package on Friday, and that evening thousands of people protested on the streets of Madrid.

This month, Spain is to become the fourth eurozone country, after Greece, Ireland and Portugal, to get bailout funds when it receives the first tranche of a 100 billion euro fund for its banking sector.

Eurozone finance ministers agreed last week to release a payout of 30 billion euros by the end of the month, and 45 billion euros in mid-November.

However, in an interview published on Saturday, Germany’s central bank chief suggested Spain would need more than the bailout for its ailing banks.

European help for Spain should target the entire economy and not just the banking sector, Bundesbank President Jens Weidmann told the Boersen Zeitung.

“The banks’ balance sheets are a reflection of the overall economy,” he was quoted as saying by the financial newspaper.

Spain’s own figures, including a record 24.4 percent unemployment in the first quarter, showed Spain still had major issues, he said.

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