Madrid tightens belt for 2012

Now Reading:

Madrid tightens belt for 2012

Text size Aa Aa

Spaniards rang in the new year with traditional gusto in spite of the economic forecasts getting worse. On each of the 12 strokes of midnight they struggle to down a grape; many can expect harder months ahead.

A celebrant in Puerta del Sol square, asked how the country was going to get out of the crisis, said: “By working, struggling and fighting.”

On the second last day of 2011, the new centre-right government unveiled its vision of austerity to try to shrink the holes in Spain’s public finances. Four ministers together put on a determined face.

Soraya Saenz de Santamaría, the deputy prime minister, said: “These measures are the beginning of the beginning of a package of structural reforms whose intention is to correct the public deficit and make our economy dynamic again.”

The main action is to raise income and property taxes in an attempt to boost national revenues by six billion euros.

The state hopes to spend nearly nine billion euros less by freezing public sector salaries and hiring.

Ordinary Spaniards received the announcement with either resignation or a sense of injustice.

A middle-aged male resident in the capital said: “We will just have to bear it. It will affect some people more than others but there is no alternative.”

A younger woman said: “I completely reject the plan, because they always squeeze those who need help the most. They’re scrapping rental assistance; they’re going to freeze the minimum wage, and I think they should think more about other wages — those that are higher and not needed so badly.”

The minimum wage in Spain is already among the lowest in the EU — a little over 600 euros per month. The Spaniards introduced it more than 30 years ago, and this is the first time it has been frozen.

The government is not ruling out a possible increase in VAT when it presents the next budget in March. The current 18 percent sales tax, higher only than in fellow EU member Cyprus, is nearly the lowest in the bloc.