Spaniards are set to tighten their belts after the country’s Socialist government announced plans to put the brakes on its public spending spree and save 15 billion euros over two years.
A raft of measures have been announced to try and close Spain’s deficit from 11.2 percent of GDP last year to 6 percent in 2011.
After the explosion of Greece’s fiscal time bomb, Madrid is also under pressure from its fellow EU members to fix its public finances and the Spanish civil servants will be among those with lighter wallets.
Their salaries are going to be slashed by 5 percent this year before being frozen in 2011. Even government ministers won’t escape the cuts, their pay cheques will shrink by 15 percent, including the Prime Minister’s.
Families will also feel the pinch. Benefits introduced in 2007 to boost Spain’s dwindling birth rate are getting the chop.
An automatic payout to new parents for each new baby will be axed from 2011, while retirees will not see their state pensions rise in line with inflation next year.
Meanwhile, the health system will also be asked to make savings and avoid waste. Phamarcies have been instructed to hand out medication to very exact doses.
Spain will aim to reduce its public investment spending by 6 billion euros and Madrid will also ask regional governments to reduce costs by 1.2 billion.
The opposition have hit out at the drastic cuts, accusing the Spanish government of making the ‘man in the street’ pay for their own poor management of the economy.