| 17.8°C Belfast

Spain passes deficit cuts

Emergency cuts to chop Spain's financial deficit squeezed through parliament by one vote yesterday, illustrating the depth of resistance to the austerity measures.

The package, which includes a cut in civil servants' salaries, was approved by 169 votes in favour, 168 against and 13 abstentions in the 350-seat lower chamber.

A defeat would have been a serious blow for the Socialist government of Prime Minister Jose Luis Rodriguez Zapatero, which is trying to show it can handle Spain's chapter of the European sovereign debt crisis.

The measures have been welcomed by the European Union and international economic bodies, but much criticised at home as a major u-turn on social policies by the Socialists. They aim to cut spending by €15bn this year and next.

Before the vote, finance minister Elena Salgado pleaded with politicians to vote in favour, saying the measures were “painful but inevitable” in order to reduce the deficit.

Spain is coming under increasing pressure to introduce labour market, fiscal and banking reforms to cut its large deficit.

The package is also aimed at trying to halt market speculation that the debt crisis affecting Greece might spread to countries like Spain or Portugal.

Europe's top job creator two years ago, Spain now has the region's highest unemployment rate at just over 20% and is the slowest of the major economies to emerge from the recession.

The Socialists needed a simple majority to get the measures approved.

Meanwhile, strikes across France delayed flights, closed schools and frustrated commuters yesterday as workers protested over government plans to raise the retirement age past 60.

President Nicolas Sarkozy wants to raise the age to 61 or 62 — reforms that have been under discussion since well before the current European debt crisis.

Despite the protests, the French retirement changes are minor compared with the harsh austerity measures of other European nations, including Spain, Greece, Ireland and Portugal.

Unions say France's pension budget shortfall could be reduced by raising workers' monthly contributions.

“Even though we need pension reform, extending the retirement age is the most unjust way,” the head of the CFDT union, Francois Chereque, said.

To express their anger, French government workers and those in private companies from Nestle to oil giant Total walked out yesterday and planned scores of protests in Paris and elsewhere.

Belfast Telegraph