Spain unveils deep budget cuts

Spain’s
PM has outlined a plan to tackle the country’s budget crisis, amid concerns
that problems afflicting Greece may spread across the eurozone.

Jose
Luis Rodriguez Zapatero announced a 5 per cent cut to public sector salaries,
as well as reductions to pensions and regional government funding.

He
said the plan would save about 19 billion over two years.

The
aim of the new package is to trim this deficit to 6 per cent of GDP in 2011.

In
his speech to parliament, Mr Zapatero revealed other details of the plan.
Automatic increases in pensions will be suspended from 2011 and funding for
regional governments cut.

“We
aim to cut civil service wages by an average of 5 per cent in 2010 and freeze
them in 2011,” he added.

He
said his own salary and those of senior cabinet members would be cut by 15 per
cent.

Mr
Zapatero said he wanted “to contribute, with our financial stability, to
the financial stability of the eurozone”.

The
cabinet is to vote on the new proposals later this week.

Many
Spaniards fear the effect the cuts will have on the economy, which has already
contracted sharply, and where the unemployment rate exceeds 20 per cent – twice
the eurozone average.

Mr
Zapatero was speaking as government statistics showed Spain had moved out of
recession in the first quarter of this year, with growth of 0.1 per cent.

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