28 Sep 2012

Spain imposes more austerity measures

6:02 am on 28 September 2012

The Spanish government has unveiled an austerity budget of spending cuts, tax rises and structural reforms as the country struggles to overcome its economic crisis.

The measures include a freeze in public-sector pay for the third consecutive year and a 12% average cut in ministerial spending.

The only areas of spending to increase in 2013 will be pensions, student scholarships and interest payments, the BBC reports.

Expectations are growing that Spain will seek a financial bailout from its eurozone partners.

The new programme of savings, tax rises and structural reforms will be overseen by an new budget authority.

Deputy Prime Minister Soraya Saenz de Santamaria called it "a crisis budget designed to exit the crisis".

Last week, Spain's second biggest bank, BBVA, estimated that up to another €60 billion will be needed to bail out the banking sector. About €20 billion has already been allocated to troubled banks.

Spain, the eurozone's fourth largest economy, fell back into recession in the last quarter of 2011, the second recession since the bursting of the country's property bubble.