The Spanish government has unveiled series of drastic austerity measures to get to grips with its large debt.
The fresh cuts announced by Prime Minister Jose Luis Rodriguez Zapatero in Parliament aim to restore confidence in Spain, seen as vulnerable in the wake of the Greek crisis.
With the deficit currently running at 11 percent of GDP the painful plan includes slashing civil servants salaries by 5 percent. Pensions and public investment will also be chopped.
The Spanish Prime Minister said: ‘‘These are measures that the government believes are vital for deficit reduction, to reinforce confidence in the economy and to contribute to the financial stability of the euro. That envisages a spending reduction of 15 billion euros for 2010 and 2011.
Madrid is coming under immense pressure from the EU amid fears it could go the same way as Athens.
Earlier this week, a massive multi-billion euro bailout was agreed by eurozone finance chiefs to restore confidence in the single currency, but markets are still sceptical about Europe’s most debt ridden economies.
Spain announces fresh budget cuts