Spain details deep spending cuts as public anger grows

Fri Jul 13, 2012 1:18pm EDT
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By Andrés González and Feliciano Tisera

MADRID (Reuters) - Spain created an emergency fund to protect its regional governments from defaulting and warned pensions will also be overhauled as public anger mounted on Friday over the deep spending cuts needed to dodge an international bailout.

After a weekly cabinet meeting, the government gave details of the 65-billion-euro ($80-billion) austerity package Prime Minister Mariano Rajoy announced on Wednesday.

Ministers approved an overhaul of city and regional governments, wage cuts for public workers and cuts in unemployment benefits. They said they would also pass this month a reform of the energy sector and laws to liberalize the rail, road and air transport sectors.

Workers blocked streets and railways in Madrid in protests against cuts which they said hurt ordinary people more than the bankers and politicians blamed for the country's economic crisis.

More than 100 civil servants gathered outside the presidential palace, whistling and booing, as Prime Minister Mariano Rajoy's ministers convened under pressure from euro zone leaders and financial markets to approve the new budget plan.

"Spaniards are living today one of the most difficult and traumatic moments of our history, a crisis which has muted into a daily drama for millions of Spaniards," said Deputy Prime Minister Soraya Saenz de Santamaria at a news conference.

Acknowledging the widespread economic pain, she added: "Thousands of Spaniards have been pushed to the edge, and millions are unemployed."

Spain, which enjoyed 30 years of almost uninterrupted economic growth until 2007, is now on the front line of the 2-1/2-year euro zone debt crisis after crippled banks, indebted regions and a new, deep recession stretched the country's public finances and unnerved investors.   Continued...