"Our public spending exceeds our income by tens of billions of euros"
- Mariano Rajoy, Spanish Prime Minister
Spanish Prime Minister Mariano Rajoy announced new austerity measures on Wednesday to cut budget deficit by 65 billion euros by 2014. Measures include a three point increase in Valued Added Tax, cuts in jobless benefits and public wages.
"These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billions of euros," Mariano Rajoy told parliament.
"This is a clear demonstration of the macroeconomic conditionality that we had to accept in exchange for the banking aid and in exchange for more time to cut the deficit to 3 percent," said Santiago Sanchez Guiu, economist at the Carlos III university in Madrid.
European stocks closed mixed on Wednesday. The Stoxx Europe 600 Index fell to 255.59. Germany's DAX Index added 0.24 per cent and France's CAC 40 Index retreated 0.57 per cent.
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