After adopting the euro, the Spanish economy initially benefited from sharply lower interest rates, spurring a property bubble. However, with the onset of the global financial crisis, property prices collapsed, causing widespread layoffs, and pushing unemployment to more than 26 per cent by the end of 2012. Spain received a bank bailout from the European Central Bank in 2012.
Spaniards rage against austerity near Parliament
Spain’s government was hit hard by the country’s financial crisis on multiple fronts on Tuesday as protestors enraged with austerity cutbacks and tax hikes clashed with police near Parliament, a separatist-minded region set elections seen as an independence referendum and the nation’s high borrowing costs rose again
More than 1,000 riot police blocked off access to the Parliament building in the heart of Madrid, forcing most protesters to crowd nearby avenues and shutting down traffic at the height of the evening rush hour.
Police used batons to push back some protesters at the front of the march attended by an estimated 6,000 people as tempers flared, and some demonstrators broke down barricades and threw rocks and bottles toward authorities.
Television images showed officers beating protesters in response, and a television producer saw five people dragged away by police and two protesters bloodied. Spanish state TV said at least 28 were injured, including two officers, and that 22 people were detained. Independent Spanish media reported higher numbers that could not immediately be confirmed.
The demonstration, organised with an “Occupy Congress” slogan, drew protesters from all walks of life weary of nine straight months of painful economic austerity measures imposed by Prime Minister Mariano Rajoy and his solid majority of lawmakers. Smaller demonstrations on Tuesday attracted hundreds of protesters in Barcelona and Seville.
Angry Madrid marchers who got as close as they could to Parliament, 250 metres away, yelled “Get out!, Get out! They don’t represent us! Fire them!”
“The only solution is that we should put everyone in Parliament out on the street so they know what it’s like,” said Maria Pilar Lopez, a 60-year-old government secretary.
Lopez and others called for fresh elections, claiming the government’s hard-hitting austerity measures are proof that the ruling Popular Party misled voters when it won power last November in a landslide.
While Rajoy has said he has no plans to cut pensions for Spaniards, Lopez fears her retirement age could be raised from 65 to as much as 70. Three of her seven nieces and nephews have been laid off since Rajoy ousted Spain’s Socialists, and she said the prospect of them finding jobs “is very bleak.”
Spain is struggling in its second recession in three years with unemployment near 25 per cent. The country has introduced austerity measures and economic reforms in a bid to convince its euro partners and investors that it is serious about reducing its bloated deficit to 6.3 per cent of gross domestic product this year and 4.5 per cent next year.
The deficit reached US$64.8 billion, equivalent to 4.77 per cent of GDP, through August, the government said on Tuesday. Secretary of State for the Budget Marta Fernandez Curras said the deficit “is under control”.
Spain has been under pressure from investors to apply for European Central Bank assistance in keeping its borrowing costs down. Rajoy has yet to say whether Madrid will apply for the aid, reluctant to ask since such assistance comes with strings attached.