Spain unveils €40bn of fresh austerity measures
The Spanish government has announced €40bn in spending cuts and budget savings in its latest attempt to turnaround the country’s struggling economy.
The 2013 budget, the fifth round of cuts and tax hikes announced the past nine months, is in line with recommendations made by the EU in July, Spanish officials said.
The proposals will see government spending fall by 8.9% next year, with such expenditure set to be monitored by a new independent budgetary authority.
Bond markets reacted positively to the news, Spanish 10-year yields moving back below the 6% mark. Spain’s benchmark IBEX equity index rose 1% at the open this morning.
The measures suggest Spain is a step closer to an EU bailout that would, in turn, pave the way for sovereign debt purchases by the European Central Bank.
The ECB said last month it was prepared to buy “unlimited” quantities of short-term sovereign debt from countries that had entered EU bailout programmes.
Today (28 September) will see the publication of an independent audit of Spain’s banks, gauging how much of the EU’s €100bn June bank bailout package will be required to shore up capital ratios.
This article was first published on Investment Week