Spain Announces 65 Billion in Austerity measures

After the International Labour Organization published a report that austerity measures could cost the Eurozone 4.5 million jobs Spain is announcing its new round of Austerity measures.

In what is to make Prime Minister Mariano Rajoy very unpopular the austerity package includes service cuts as well as tax hikes adding up to 65 million euros. The opposition parties have protested that this will further reduce Spain’s chances of getting out of a recession and decrease unemployment, currently at 22 percent.

Even with the current ESM approved (but not yet delivered), the 30 Billion emergency rescue (still in court) and a 1 percent increase in the deficit target form 5.3% to 6.3% and an extra year to reach it… It will be hard for Spain to go from 8.9 percent to 6.3 percent in a year by decreasing civil servant’s pay and increasing the retirement age align with tax hikes.

Opposition parties in Europe are gaining the upper hand by making the promise that stimulus can reverse the current tide, although it must be said it was too much stimulus which caused the current predicament the Eurozone finds itself in.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza