Spain cuts public spending by another EUR 1 bn

13th May 2009, Comments 0 comments

The additional cuts are the Spanish government’s attempts to reduce the growing public deficit.

Madrid – Spanish Prime Minister Jose Luis Rodriguez Zapatero Tuesday announced a further reduction of EUR 1 billion in spending for 2009 in a bid to reduce the public deficit.

In a speech to parliament, he did not explain where the additional cuts would take place.

In February, the Spanish government announced a budget reduction of EUR 1.5 billion.

"Now we are going to extend this reduction by EUR 1 billion more – at EUR 2.5 billion for a single financial year, it is the biggest budget austerity effort ever" since the end of the dictatorship of Francisco Franco in 1975, he said.

Spain's economy, the fifth largest in Europe, entered recession at the end of 2008 as the international financial crisis hit an already weakened building sector which had been the country's engine of growth.

The country's recorded a deficit equivalent to 0.69 percent of gross domestic product in the first quarter of 2009, compared to a surplus of EUR 3.3 billion a year earlier.

In April, the Bank of Spain predicted the country will see a budget deficit equal to 8.3 percent of GDP in 2009 and 8.7 percent in 2010, well above the EU limit of 3.0 percent.

AFP / Expatica

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