The Spanish government today presents its toughest budget for decades to parliament as bad news mounts concerning the country’s debt.
Credit agency Moody’s this morning downgraded Spain’s rating a notch, from Aaa to Aa1, citing the “weak” economic outlook. Prime Minister Zapatero’s efforts to control public debt spared a two-notch downgrade, said Moody’s.
But his reforms are being fiercely contested in towns and cities across Spain.
Already public sector wages have been cut by five percent and government departments are to lose an average of 16 percent on next year’s budgets.
Zapatero insists he will press on with plans to raise the retirement age and open up the labour market, making it easier for firms to hire and fire.
Spanish unions say up to 10 million workers joined nationwide strikes yesterday, some of which turned violent.
Financial markets seem to have shrugged off the unions’ protests, believing them unlikely to make the government back down from its austerity plans.