Sat, Jul 21, 2012 - Page 7 News List

Protesters say austerity is ‘ruining’ Spain’s economy

‘A BARBARITY’:Madrid’s announcement of new cuts to meet EU-imposed deficit targets has added more fuel to the anger that has sparked nationwide protests for weeks


Firemen hold a banner reading “Burned-out workers” in front of City Hall in Madrid as they march against government austerity measures on Thursday.

Photo: Reuters

Thousands of Spaniards protested in 80 cities throughout Spain on Thursday against the government’s latest austerity package, blaming officials for “ruining” the country.

Protesters flooded Madrid’s main Puerta del Sol square and the streets in front of the Spanish Parliament late into the night. Large deployments of riot police manned barricades in front of the legislature, fearing that violence could erupt.

Large crowds also gathered in Barcelona and Bilbao, while leading Spanish newspaper El Pais estimated on its Web site that more than 100,000 had attended the rally in the country’s capital.

Marchers in Madrid carried Spanish flags bearing black bows for mourning and banners saying “No to the cuts” and “You ruined us.”

The country is in its second recession in three years and the Spanish government’s borrowing rates are unsustainably high as investors worry the government may face new costs in rescuing the banks. If the borrowing rates do not go down, Spain may need a sovereign bailout like that taken by Greece.

Concerns over Spain’s attempts to restore market confidence in its economy resurfaced after a bond auction went poorly and its borrowing costs edged higher — even as the parliament passed the latest round of austerity measures.

The ruling conservative Popular Party used its majority in parliament to push through the measures, which include a rise in sales taxes and a wage cut for civil servants.

The government also published details of the 100 billion euro (US$122.9 billion) financial assistance agreement between Spain and the Eurogroup aimed at shoring up the country’s struggling banks.

The Spanish Ministry of Economy and Finance said the precise bailout amount “will be known once a bank-to-bank scan is complete.”

The vote in parliament followed an auction of medium-term Spanish bonds, where the government had to pay substantially higher interest rates to unload 2.96 billion euros in bonds maturing in 2014, 2017 and 2019. Its target range was 2 billion euros to 3 billion euros. Demand was roughly two times the amount on offer for each issue. However, that was down from earlier auctions.

In addition, the interest rate on five-year debt rose sharply to 6.46 percent, from 5.54 percent at the last such auction on July 5. In the secondary bond market the yield on benchmark Spanish 10-year bonds — a measure of investor worries about the security of a country’s debt — was at 6.95 percent on Thursday, up 0.05 percentage points.

The country’s government, led by Spanish Prime Minister Mariano Rajoy, introduced the latest round of spending cuts and tax increases to shave 65 billion euros off the government’s budgets by 2015.

Rajoy unveiled the austerity package last week after eurozone finance ministers agreed the terms of a bailout of up to 100 billion euros to strengthen Spain’s banks and gave the government an extra year to hit deficit reduction targets.

The eurozone finance ministers were scheduled to hold a conference yesterday to give final approval for the bank bailout package.

Spanish Treasury Minister Cristobal Montoro pulled no punches as he launched the debate in the morning. A day after saying “there is no money” to pay civil servant wages because recession and a jobless rate of nearly 25 percent are sapping tax revenue, he said on Thursday that Spain cannot go deeper into debt.

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