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Updated: May 27, 2010 18:51 IST

Spanish parliament approves austerity package

DPA
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Spain's Prime Minister Jose Luis Rodriguez Zapatero speaks on the phone before a vote aimed at reducing the country's deficit during a plenary session in the Spanish parliament in Madrid, on Thursday. Photo: AP.
Spain's Prime Minister Jose Luis Rodriguez Zapatero speaks on the phone before a vote aimed at reducing the country's deficit during a plenary session in the Spanish parliament in Madrid, on Thursday. Photo: AP.

Spain’s parliament on Thursday approved by only one vote an austerity package aimed at bolstering the country’s financial credibility, as some parties urged Prime Minister Jose Luis Rodriguez Zapatero to resign.

The package was approved with 169 votes from Mr. Zapatero’s Socialist Party, while 168 legislators from other parties voted against it.

Thirteen legislators abstained.

Passing the package required opposition parties to either support the measure, or at least abstain from the vote. Nonetheless, the package has sent the premier’s support plunging and prompted trade union protests.

The government’s traditional Basque nationalist allies rejected the package, but the Catalan nationalist party CiU and two other regionalist parties abstained, making it possible for parliament to approve it.

The government would seek “more consensus” for future initiatives and reforms, Mr. Zapatero said.

The austerity programme aims at strengthening Spain’s financial credibility amid concern within the European Union that the country could be heading for a Greek—style crisis.

The package would create savings of 15 billion euros (24 billion dollars) in 2010—11. The planned measures include cutting public sector salaries by an average of 5 per cent, freezing pension payments and trimming public investments.

The government wants to reduce Spain’s public deficit of 11.2 per cent of gross domestic product — one of the eurozone’s highest — to below the EU limit of 3 per cent by 2013.

During the parliamentary debate, Economy Minister Elena Salgado rejected the widespread view that the austerity measures would hold back growth. They were “an indispensable condition for boosting economic activity and employment,” she said.

Spain’s unemployment of about 20 per cent is the highest in Western Europe.

Conservative opposition leader Mariano Rajoy said his People’s Party (PP) rejected the package, because it did not want to contribute to perpetuating “the main problem of the Spanish economy,” by which he was referring to Mr. Zapatero as prime minister.

CiU representative Josep Antoni Duran Lleida also urged Mr. Zapatero to resign after the annual budget has been wrapped up later this year.

The government has come under widespread criticism over its handling of the economic crisis. The Socialists are now lagging behind the PP in polls, despite corruption scandals affecting the conservatives.

Trade unions have threatened with a general strike, unless the government backtracks on Spain’s first cuts in public sector salaries for three decades.

Spain rose out of recession in the first quarter — one of the last large Western economies to do so. International analysts expect growth to remain slow for several years.

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