Spanish government officials outlined a new austerity budget today, aimed at shaving some €40 billion—8.9% of the budget and 0.77% of GDP—in 2013. The announcement comes amid a deepening recession in Europe’s fourth largest economy, calls from protestors outside parliament for Prime Minister Mariano Rajoy’s resignation, and pressure for Spanish officials to request a full international bailout. The aggressive budget is an attempt by the Spaniards to set their own austerity terms rather than having Brussels dictate conditions for them.
Overall, the announcement was light on specifics. More details are due out tomorrow, followed by proposals for 43 new laws. Most significantly, Spanish officials have not so far made a formal request for aid from the European Union, International Monetary Fund (IMF), and the European Central Bank (ECB)—the “troika”—as some investors had hoped. (The ECB has offered to buy short-dated government bonds from countries making aid requests in an attempt to lower their borrowing costs and encourage continued access to financial markets.) Spanish officials said they were still looking into the terms of the program, but it’s also likely they’re waiting for details from an independent review of their banking sector, due out tomorrow.
Highlights from today’s announcement: