The pain in Spain - austerity package details

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The pain in Spain - austerity package details

The pain in Spain - austerity package details
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The Spanish government’s additional spending cuts – narrowly voted through parliament on Thursday – include a 1.2 billion euros reduction of funding to the country’s regions.

Public workers salaries will fall by an average five percent from June and next year there will be a freeze on their wages plus 13,000 job cuts.

Government ministers pay will fall by 15 percent.

Pensions will no longer automatically rise with inflation and a 2,500 euro payout to parents when a child is born has also been scrapped.

The total austerity package is intended to save an additional 15 billion euros over two years.

The aim is to trim Spain’s budget deficit from 11.2 percent of gross domestic product last year to 9.3 percent this year and get it down to three percent by 2013.

But economist Nouriel Roubini, of New York University, who forecast the financial crash of 2008,
warned Spain, and others, have to do more than just cut: “If everybody is doing fiscal contraction, there’s going to be another double-dip depression in the euro zone. So, many things have to be done in addition to fiscal austerity, austerity by itself is not enough.”

These latest cuts come as Spain has barely edged out of recession after two years.

That recession has sent its unemployment rate soaring to more than 20 percent of the working population in the first quarter of 2010 – the highest in the euro zone.

The government will also soon unveil proposals to raise taxes on the wealthiest Spaniards.

The prime minister said they will have to “show solidarity with the rest of the country in this time of crisis.”