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    Default Spain announces $36 bn in budget cuts

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    Spain's government unveiled on Friday a $36 billion deficit-reduction package including spending cuts and tax hikes on large companies, as it scrambles to convince the EU and investors that it won't need a bailout.

    Deputy Prime Minister Soraya Saenz de Santamaria said the 2012 draft budget calls for cutting central government ministry spending by an average of nearly 17 per cent and freezing civil servant wages. Overall government spending will be cut by 17 billion euros.
    Finance Minister Cristobal Montoro said it was the most austere budget proposal since Spain regained democracy in 1977 after the death of Fen. Francisco Franco.

    "We are taking extraordinary measures because the situation is extraordinary," Montoro told a news conference after a Cabinet meeting at which the budget plan was passed.

    The blueprint will go to Parliament on Tuesday and is expected to be formally passed in June.

    Spain's commitment is to cut its budget deficit to 5.3 per cent of GDP from 8.5 per cent last year. The challenge is doing so as the economy shrinks and with unemployment of nearly 23 per cent.

    The austerity plan came a day after a general strike over labor reforms that make it easier and cheaper for companies to lay people off.



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