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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.
They will be discussing the possible expansion of Europe's bailout funds, the European Financial Stability Fund (EFSF), and the European Stability Mechanism, which launches in July. 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 expected to discuss a temporary measure which would double the size of the funds' capacity. 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 fearsBailout 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."
Correspondents say there is concern that if the situation does not improve, Spain might eventually need a bailout.
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."