Spanish budget shows no relief on rising debts

Kasmira Jefford
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SPAIN’S debt levels are set to increase further next year, putting further pressure on the government to apply for aid as it pours funds in to cash-strapped regions, an ailing banking system and rising refinancing costs, its budget showed over the weekend.

In its 2013 budget plan presented to parliament, the government said that Spain’s debt as a ratio of gross domestic product will reach 90.5 per cent by end 2013 – almost three times that registered before the country’s property bubble burst in 2008.

The new budget aims to make savings of around €13bn (£10.3bn) next year, largely by deepening already unpopular cuts in public sector wages, education, health and social services, sparking anti-austerity protests.

Thousands of protesters gathered in Madrid on Saturday night for a third time this week to vent anger at politicians they accuse of pillaging the welfare state to bail out its banks.

The downturn in the Spanish economy has seen unemployment swell to more than double the EU average, with half of all working-age under-26s unable to find jobs and shattered businesses laying off employees they cannot afford to pay. Prime Minister Mariano Rajoy has so far delayed any plea for aid, though last week’s reforms and the budget plan are seen by many as an effort to pre-empt the likely terms of a bailout.

Meanwhile, thousands of protestors also took to the streets in Paris yesterday against a European fiscal pact, in the first major display of public anger since French president Francois Hollande was elected in May.

And in Germany, the country’s newly appointed opposition party leader Peer Steinbrück told Die Welt am Sonntag newspaper that Greece should be given more time to implement its economic reforms.

He said chancellor Angela Merkel to must “come clean” and admit that Greece will need help for another seven or eight years.