Spain Unleashes New Austerity Measures

Alberto Di Lolli / AP Photo

A woman holds a banner reading " Thieves, give us back our illusions", during a protest against the alleged abuse of power by banks and frauds committed by savings banks, in Madrid, Spain on Saturday, March 3, 2012. Protesters gathered in seven other Spanish cities under the slogan "Against bank abuse". So far the Bank of Spain has had to bail out three failed savings banks. Yesterday, Spanish Prime Minister Mariano Rajoy said Spain's government deficit will reach 5.8 percent of economic output this year, much higher than the 4.4 percent Madrid had promised to the other states in the 27-nation bloc.

The Spanish government is celebrating being granted a big bank bailout by the U.N. with a brand-new plan for austerity. Spain plans to tighten its belt even further through a new hike in sales tax on such things as cigarettes, cars, clothing, and telephone services, as well as public transportation, processed foods, and hotel and bar services. They’re also adding several more spending cuts in the hope of taking $79.85 billion off its total budget over the next two and a half years. “We are living in a crucial moment which will determine our future and that of our families, that of our youth, of our welfare state,” said Spanish Prime Minister Mariano Rajoy. “This is the reality. There is no other and we have to get out of this hole and we have to do it as soon as possible and there is no room for fantasies or off-the-cuff improvisations because there is no choice.”