Spain’s Intense Pain

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Just hours after eurozone financial leaders announced a credit line of 100bn euros to recapitalize Spain’s banks, and as Spanish miners march on Madrid in protest over cuts to subsidies in their industry, Spanish Prime Minister Mariano Rajoy has announced a 3% rise in VAT and an increase in sales tax from 16% to 21%. Señor Rajoy also ushered in a 3.5bn euro cut in local authority budgets. These hard-to-swallow austerity measures are all part of the agreement Spain‘s government has with the eurozone leaders; on Monday Rajoy was given one year to comply with deficit targets and three months for the “government to adopt efficient measures.” Spain will have until 2014 to reduce the current deficit level of 8.9% to 3%. Rajoy’s announcement today is a sign that Spain is taking the agreement very seriously. The formal agreement is expected to be signed by the Eurogroup on July 20. Meanwhile miners, who have walked as far as Asturias, over 250 miles away, face an even harder journey home.

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About Author

Lucy Culpepper

Lucy Culpepper has traveled to, written about, and worked in some 30 countries. She is originally from Wales in the United Kingdom, has lived all over the UK, in southern California, Spain, and France and has spent extended time in Mexico, Panama, and Costa Rica.