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Spanish government to unveil 'very austere' budget | Spanish government to unveil 'very austere' budget |
(40 minutes later) | |
The Spanish government is due to unveil what is expected to be one of the toughest budgets in its recent history. | The Spanish government is due to unveil what is expected to be one of the toughest budgets in its recent history. |
Newly-elected Prime Minister Mariano Rajoy has already warned the budget will be "very austere". | Newly-elected Prime Minister Mariano Rajoy has already warned the budget will be "very austere". |
On Thursday, Spanish police clashed with protesters after a general strike was held to protest against labour reforms designed to cut unemployment. | On Thursday, Spanish police clashed with protesters after a general strike was held to protest against labour reforms designed to cut unemployment. |
Eurozone finance ministers, who meet in Copenhagen later on Friday, will be watching developments in Spain. | Eurozone finance ministers, who meet in Copenhagen later on Friday, will be watching developments in Spain. |
Ministers are discussing the possible expansion of Europe's bailout funds, the European Financial Stability Fund (EFSF), and the European Stability Mechanism, which launches in July. | |
There has, of late, been increasing concern that Spain might eventually need a bail-out. So the expectation is that cuts will be announced of around 35 billion euros. | There has, of late, been increasing concern that Spain might eventually need a bail-out. So the expectation is that cuts will be announced of around 35 billion euros. |
Health and education funding are unlikely to escape. That is one reason why hundreds of thousands protested yesterday during a general strike. The size of the crowds indicate many are losing patience with austerity. | Health and education funding are unlikely to escape. That is one reason why hundreds of thousands protested yesterday during a general strike. The size of the crowds indicate many are losing patience with austerity. |
The budget will also be controversial because Spain is in the midst of a recession with unemployment at 24%. Some have warned that the country risks falling into a downward spiral. | The budget will also be controversial because Spain is in the midst of a recession with unemployment at 24%. Some have warned that the country risks falling into a downward spiral. |
At the moment the EFSF is capped at 500bn euros ($667.8m; £417m), which analysts say is not sufficient if a big nation like Spain or Italy needed financial help. | At the moment the EFSF is capped at 500bn euros ($667.8m; £417m), which analysts say is not sufficient if a big nation like Spain or Italy needed financial help. |
Ministers are discussing a temporary measure which would double the size of the funds' capacity. | |
But Spain said its austerity budget would prove that it would not follow Greece, Ireland and Portugal in needing a bailout. | |
"Spain is going to stop being a problem, especially for the Spanish people but also for the European Union," Economy Minister Luis de Guindos said as he arrived for the informal meeting in Denmark. | |
Bailout fears | Bailout fears |
Spain, which is suffering from the highest levels of unemployment in Europe, is under intense pressure from eurozone leaders to reduce its deficit. | Spain, which is suffering from the highest levels of unemployment in Europe, is under intense pressure from eurozone leaders to reduce its deficit. |
Speaking on his way into Friday's meeting of finance ministers, EU Economic and Monetary Affairs Commissioner Olli Rehn said: "Spain is in a very difficult situation, but on the other hand Spain has many strengths. | Speaking on his way into Friday's meeting of finance ministers, EU Economic and Monetary Affairs Commissioner Olli Rehn said: "Spain is in a very difficult situation, but on the other hand Spain has many strengths. |
"Now it is important that Spain continues with consistency in order to impose the sustainability of its public finances." | "Now it is important that Spain continues with consistency in order to impose the sustainability of its public finances." |
The BBC's Gavin Hewitt in Brussels says the cuts are expected to be around 35bn euros ($46.5bn; £29bn), and that health and education funding are unlikely to escape. | The BBC's Gavin Hewitt in Brussels says the cuts are expected to be around 35bn euros ($46.5bn; £29bn), and that health and education funding are unlikely to escape. |
Budget Minister Cristobal Montoro said it would be the most austere budget since Spain became a democracy. | Budget Minister Cristobal Montoro said it would be the most austere budget since Spain became a democracy. |
"It needs a budgetary effort that up to now we have probably never made in our country." | "It needs a budgetary effort that up to now we have probably never made in our country." |
On Thursday, police clashed with demonstrators as hundreds of thousands swamped streets in Barcelona and other cities. | On Thursday, police clashed with demonstrators as hundreds of thousands swamped streets in Barcelona and other cities. |
Unions said 800,000 people joined the protest in Barcelona. Police put the number at 80,000. | Unions said 800,000 people joined the protest in Barcelona. Police put the number at 80,000. |
Some marchers in the city smashed windows and set rubbish bins alight. Police fired tear gas and shot rubber bullets at the ground, TV pictures showed. | Some marchers in the city smashed windows and set rubbish bins alight. Police fired tear gas and shot rubber bullets at the ground, TV pictures showed. |
In the capital, Madrid, unions said around 900,000 people took part. The government did not give a figure. | In the capital, Madrid, unions said around 900,000 people took part. The government did not give a figure. |
'Not yielding' | 'Not yielding' |
Our correspondent says the size of the demonstrations on Thursday were an indication that many are losing patience with austerity. | Our correspondent says the size of the demonstrations on Thursday were an indication that many are losing patience with austerity. |
Unemployment in Spain is currently the highest in the EU at 24%. Nearly half of Spain's under 25s are out of work. | Unemployment in Spain is currently the highest in the EU at 24%. Nearly half of Spain's under 25s are out of work. |
The general strike was the government's first big challenge since Mariano Rajoy took office after elections last November. | The general strike was the government's first big challenge since Mariano Rajoy took office after elections last November. |
Despite the opposition, the government says it is committed to reining in its spending. | Despite the opposition, the government says it is committed to reining in its spending. |
"The question here is not whether the strike is honoured by many or few, but rather whether we get out of the crisis," Mr Montoro said. | "The question here is not whether the strike is honoured by many or few, but rather whether we get out of the crisis," Mr Montoro said. |
"That is what is at stake, and the government is not going to yield." | "That is what is at stake, and the government is not going to yield." |