Spain govt stands firm over protests, cuts

Spain’s government on Wednesday defended police who beat and fired rubber bullets at protesters angry at its economic management, as it prepared fresh cuts to avert a full-blown bailout.

The Madrid protests increased the pressure on Prime Minister Mariano Rajoy, who is already grappling with a fresh surge in borrowing costs and with pro-independence stirrings in Catalonia, which has called snap elections.

Thousands of mostly peaceful demonstrators massed outside the parliament in Madrid into the early hours Wednesday to express their anger at the government’s handling of the economic crisis.

Riot police dispersed many of them with rubber bullets and batons.

“It was a clearly illegal gathering,” Interior Minister Jorge Fernandez Diaz told Cadena Ser radio, citing a law that bans rallies outside parliament that disrupt its work.

“Such an assault on constitutional order could not be permitted. The police acted splendidly,” he said.

The charges made dramatic scenes in central Madrid, but with little material damage caused by protesters it seemed to be the least of Rajoy’s headaches on Wednesday.

Figures from the Bank of Spain showed the country’s recession deepening with economic output sliding fast.

“Available data for the third quarter of the year suggest output continued to fall at a significant pace, in an environment in which financial tension remained at very high levels,” it said in a monthly report.

The Madrid stock exchange fell by more than three percent in early afternoon trade, and the interest rate on Spanish 10-year sovereign debt rose above six percent.

Spain, the eurozone’s fourth largest economy, tumbled into recession in the last quarter of 2011, its second in two years.

Driven by the collapse of a building boom, the downturn has thrown millions out of work and many families into poverty. The unemployment rate is close to 25 percent.

The government was due to adopt a 2013 austerity budget on Thursday and on Friday unveil an independent audit of its stricken banks to determine how much capital they need.

Analysts say that audit result could be followed by Spain formally requesting a full bailout from the eurozone.

The budget plan, known in outline since July and due to be adopted by the cabinet on Thursday, is expected to enact spending cuts and tax increases worth a combined 39 billion euros.

Protesters say these measures, on top of tens of billions of earlier measures to lower the deficit and fix Spain’s finances, punish the poor unfairly.

Emergency services said 64 people including 27 police were treated for injuries in the latest demonstrations, including one person who had suffered a serious back injury.

Police arrested 35 people, said the central government’s delegate to the Madrid region, Cristina Cifuentes.

In the first of the charges seen by AFP reporters Tuesday, police beat protesters when some tried to break through metal barriers blocking the way to the lower house Congress.

Meanwhile, the push for greater independence for Catalonia, which Rajoy says threatens the unity of Spain as it tries to survive the crisis, gathered pace on Wednesday.

The region’s president Artur Mas called a snap election over the issue on Tuesday after Rajoy last week rejected his proposals for Catalonia to enjoy greater powers to tax and spend.

Media reported on Wednesday that Mas wanted a referendum on independence after the election on November 25.

Analysts at Deutsche Bank warned in a note: “Political turmoil in Spain’s richest region could generate the kind of market reaction which would precipitate a request for European support by Madrid.”