Neubarth
At the Ballpark July 30th
MADRID/BRUSSELS (Reuters) - Spain became the latest euro zone country to announce sweeping austerity measures on Wednesday as the executive European Commission sought unprecedented power to pre-vet national budgets.
Prime Minister Jose Luis Rodriguez Zapatero said Madrid would slash civil service pay by 5 percent this year, freeze it in 2011, cut investment spending and pensions and axe 13,000 public sector jobs in a drive to meet EU deficit targets.
"We have to make a singular, exceptional and extraordinary effort to reduce our public deficit and we have to do it when the economy is starting to recover," he told parliament.
The announcement came two days after euro zone governments, the European Central Bank and the IMF agreed on a $1 trillion rescue package to stabilize the euro in exchange for pledges from highly indebted European countries to cut their deficits.
Portugal's finance minister said his government had picked a set of new measures for deeper spending cuts and would discuss them with the opposition before announcing them.
U.S. President Barack Obama, who has intervened in the euro zone crisis because of risks to U.S. banks and economic growth, telephoned Zapatero on Tuesday to press for "resolute action" to strengthen the Spanish economy, the White House said.
Spain enjoyed more than a decade of rapid growth fueled by EU regional aid and low euro interest rates, and long boasted a healthy budget balance and low debt. But public finances were severely hit by the collapse of a construction bubble in the 2007-8 credit crisis. The economy has lost competitiveness and unemployment stands at 20 percent of the workforce.
Prime Minister Jose Luis Rodriguez Zapatero said Madrid would slash civil service pay by 5 percent this year, freeze it in 2011, cut investment spending and pensions and axe 13,000 public sector jobs in a drive to meet EU deficit targets.
"We have to make a singular, exceptional and extraordinary effort to reduce our public deficit and we have to do it when the economy is starting to recover," he told parliament.
The announcement came two days after euro zone governments, the European Central Bank and the IMF agreed on a $1 trillion rescue package to stabilize the euro in exchange for pledges from highly indebted European countries to cut their deficits.
Portugal's finance minister said his government had picked a set of new measures for deeper spending cuts and would discuss them with the opposition before announcing them.
U.S. President Barack Obama, who has intervened in the euro zone crisis because of risks to U.S. banks and economic growth, telephoned Zapatero on Tuesday to press for "resolute action" to strengthen the Spanish economy, the White House said.
Spain enjoyed more than a decade of rapid growth fueled by EU regional aid and low euro interest rates, and long boasted a healthy budget balance and low debt. But public finances were severely hit by the collapse of a construction bubble in the 2007-8 credit crisis. The economy has lost competitiveness and unemployment stands at 20 percent of the workforce.
