Spanish lawmakers approve massive cuts

The Spanish parliament has backed an
$18.4 billion austerity package by one vote as the country strives to cut its
budget deficit.

The vote saw 169 in favour of the
Socialist government’s austerity plan and 168 against, with 13 abstentions.

Spain announced the austerity
package earlier this month. It includes wage cuts of 5 per cent or more for
civil servants and slashes public investment plans.

Spain hopes to rein in its deficit
and ease fears of a Greek-style crisis.

A parliamentary defeat would have
been a blow to the Socialist government of Prime Minister Jose Luis Rodriguez

Spain’s programme is intended to
reduce a deficit of 11 per cent of GDP to 6 per cent by 2011.

“The result is calming for the
markets because a vote against would have been very worrying,” said Jose
Luis Martinez, a strategist at Citigroup.

“But the small margin is
worrying considering what Spain is facing.”

Many Spaniards fear the effect the
cuts will have on the economy, where the unemployment rate exceeds 20 per cent –
twice the eurozone average.

The country moved out of recession
in the first quarter of this year, with growth of 0.1 per cent.

The European Union has been anxious
to see more fragile European economies, including Spain, Portugal and Greece, impose
tougher austerity measures.