Spain unveils Eo,CUu65b austerity package amid EU pressure.
MADRID: Spain's Prime Minister Mariano Rajoy announced yesterday a EoCUu65-billion ($80 billion) austerity package to avert financial collapse as angry miners rallied against subsidy cuts.
Rajoy, interrupted by howls from opposition members as he outlined the cuts, performed a U-turn by ramping up value added Value Added
The enhancement a company gives its product or service before offering the product to customers.
This can either increase the products price or value. sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. having promised he would not raise it, and took an axe to state expenditure.
"These are not pleasant measures but they are necessary," said the bearded 57-year-old leader of the conservative Popular Party.
Rajoy reminded parliament that Spain is going through one of its worst recessions in history, with unemployment at 24.4 per cent, and economic activity set to decline by 1.7 per cent this year.
Hike in VAT
Spain's premier said new spending cuts and other measures including notably a rise in value-added tax value-added tax (VAT), levy imposed on business at all levels of the manufacture and production of a good or service and based on the increase in price, or value, provided by each level. would bring in EoCUu65 billion by the end of 2014 to help trim the annual deficit.
The European Union had demanded a VAT rise along with a series of other tough measures as it gave Spain an extra year to bring its bulging public deficit back to agreed limits. The interest rate which Spain has to pay to borrow for 10 years eased fractionally as the measures were announced but remained at a crippling level of 6.743 per cent from 6.773 per cent on Tuesday.
The 17-nation single currency bloc agreed, also, to extend a deadline for Spain to cut its public deficit to the European Union's limit of 3 per cent of gross domestic product by one year to 2014. As Spain struggles with recession, the bloc agreed to relax the deficit target to 6.3 percent of GDP GDP (guanosine diphosphate): see guanine. from 5.3 per cent in 2012; to 4.5 per cent from 3 per cent in 2013 and then impose a 2.8-per cent goal for 2014.
In return, Madrid had to enact further austerity. It had already approved in March a budget for 2012 that squeezed out EoCUu27 billion in spending cuts and tax increases. "Compared to previous packages, the measures this time seem relatively straightforward to implement and will be hard to evade for tax payers," said Christian Schulz, senior economist at Capital Markets.
Worries about the eurozone Eurozone
same as Euroland
Eurozone n → eurozona, zona euro
Eurozone n → zona euro and Spain mean that the previous austerity package would likely fail to raise the promised revenue, said the London-based analyst.
"The July measures should do more to increase the credibility of the Spanish reform efforts vis-a-vis sceptical northern European leaders," he said in a report.
Important step: EU
The European Commission welcomed a new austerity package announced by the Spanish government yesterday, saying it was a key step in Madrid's efforts to meet deficit reduction targets.
"We do welcome the announcement of the new fiscal measures by the Spanish government," Simon O'Connor, the commission's economic affairs spokesman, told a news briefing.
"It's an important step to ensure that the fiscal targets for this year can be met," he said.
He added that the European Union's executive arm looks forward to receiving the details of the EoCUu65-billion. - Agencies
($80 billion) packaged unveiled by Prime Minister Mariano Rajoy to avert financial collapse.
The measures were announced one day after EU finance ministers agreed to extend a deadline for Spain to cut its public deficit to the EU's 3 per cent limit by one year to 2014.
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