Budget: Could be worse…look at Spain

By Wire services | March 30, 2012 | Last updated on March 30, 2012
2 min read

If Jim Flaherty was put off by the gallery protest during his budget speech last night, he can rest easy knowing that at least he isn’t the finance minister of Spain.

Read Budget 2012: Reaching for Balance

The Spanish budget tabled today slashes €27 billion in spending, and announced corporate tax rates will be raised later in the year. That’s €3 billion shy of the €30 billion many had anticipated.

At the budget announcement, Deputy Prime Minister Soraya Sáenz de Santamaría told the press, “The government is stuck between a rock and a hard place. People say no, we cannot take any more austerity cuts but international lenders who buy bonds say you have to make cuts or you will not be able to borrow anymore.”

People are not just saying “no” to more austerity. They’re taking the streets in a general strike, which has, at times, turned violent.

Tens of thousands held protest marches in Madrid and other cities Thursday, and the demonstrations turned violent in Spain’s second-largest city of Barcelona, where protesters smashed bank and storefront windows with hammers and rocks and set fire to street-side trash containers.

Authorities arrested 176 protesters across Spain and said 104 people were injured in clashes, including 58 police officers. There were no immediate reports of serious injuries.

European leaders insist drastic cuts must be made this year even though reductions in government spending are almost sure to boost the unemployment rate of nearly 23%, the highest among the 17 nations that use the euro.

The labour reforms make it less costly for Spanish businesses to fire workers, and give them incentives for hiring–but protesters said they are being forced to give up rights they earned decades ago.

“Why wouldn’t I protest?” asked textile worker Jose Jimenez, 60, from the Madrid protest. “I’ve spent 45 years working for the same company and now they can get rid of me almost for free.”

Others said the reforms put in place by Rajoy in February after his conservative Popular Party ousted the governing Socialists in November will only boost the profits of companies and banks.

“Workers are losing all their rights, and the benefits will go only to the banks and the businesses,” 57-year-old bus driver Fidel Martin said.

Wire services