Spain unveils billions in deficit cuts to halt eurozone crisis fearsSpain will slash public spending by €6bn and cut civil servants' by 5pc salaries this year as part of a plan to ease fears the country could slide into a debt crisis like that of Greece. Published: 9:24AM BST 12 May 2010
Jose Luis Rodriguez Zapatero - Spain unveils deficit cuts to halt eurozone crisis
Jose Luis Rodriguez Zapatero, the prime minister, on Wednesday outlined a series of measures that will include a suspension in automatic increases to retirement pensions, a drop in overseas aid and a reduction in government investment.
He said 13,000 civil service jobs would be cut in 2010, with public sector wages frozen in 2011.
Related Articles
*
Germany contracts 6pc as eurozone bank deposits fall at fastest rate since Depression
*
Ireland raises taxes in austerity budget and unveils agency to buy toxic assets
*
RBS and Lloyds close in on £500bn Treasury deal
*
Europe ambushes Germany on debt bail-out
*
Ireland plans drastic cuts to prevent debt crisis
*
ECB deems Britain unworthy of euro
Mr Zapatero was fleshing out the details of a €15bn plan announced on Sunday for deeper spending cuts to reduce Spain's deficit from 11.2pc of GDP last year to 9.3pc in 2010, and eventually to 3pc in 2013.
Spain eased out of recession with 0.1 percent growth in first quarter compared to the preceeding quarter, the government statistics' office said in a preliminary report Wednesday.
Regional governments will also be asked to make €1.2bn in savings from their budgets and the Spanish Cabinet would vote on cuts and 2011 budget spending on Friday, he said.
Core eurozone government bond futures turned negative in response to the plan with markets giving it a cautious thumbs-up.
Spain, Europe's fifth largest economy, entered its recession in the second quarter of 2008 as the global financial meltdown compounded a crisis in the Spanish property market, which had been a major driver for growth in the preceding years.
The economy continued to contract until the fourth quarter of 2009 when it shrank 0.1pc, according to the statistics office.
Spain is the last major world economy to emerge from recession.
* France's economy grew 0.1pc in the first quarter of 2010, the smallest rise in a year amid stagnant consumer spending, according to preliminary figures released Wednesday by the state statistics agency. The previous three quarters had been marked by a gradual rise from France's worst recession since the Second World War.
