Spain braces for protestsSpain braces for protests as budget cuts unveiled. (GP)
Thu, September 27, 2012 - 12:20 PM
Madrid (CNN) -- Spain will create a new fiscal authority to oversee the new spending cuts, tax increases and structural adjustments included in a new budget presented Thursday.
The country is in an economic crisis with an unemployment rate near 25%, and protests have grown against austerity measures, such as the ones included in the new budget.
Despite the budget crunch, Vice President Soraya Saenz de Santamaria said there will be increases in pensions, scholarships and interest on debt.
But the budget also includes large reductions in spending in an effort to reduce deficits.
The budgets of all ministries will be reduced by an average of 12%, Saenz said.
The package includes a "road map" of 43 proposed laws that will regulate and tweak various sectors of the economy to spur growth in weak areas and to maintain growth in stronger sectors.
For the third year in a row, salaries of public workers will be frozen.
"This is a budget made in a time of crisis, but precisely to get out of the crisis," Saenz said.
Spain, which has one of the largest economies in Europe, is fighting to bring down its huge deficit, which threatens the stability of the euro, the currency used by hundreds of millions of people across Europe.
Prime Minister Mariano Rajoy said in July that the country would cut 65 billion euros ($83 billion) from the budget in three years by raising taxes and shrinking bureaucracy.
But Spaniards have taken to the streets to demonstrate against austerity measures, and are expected to do so again after expected new cuts are unveiled.
Clashes between police and demonstrators in central Madrid's Neptuno Square resulted in 28 people being hurt Tuesday, two of them police officers, a police spokesman said.
The spokesman said 22 people among the estimated crowd of 6,000 had been arrested.
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