Following a week of emotional protests across Spain, thousands of Spanish protesters on Thursday marched throughout 80 Spanish cities, protesting Prime Minister Mariano Rajoy’s latest decision to secure the support of his conservative Popular Party for an unpopular package of spending cuts and tax increases.
The newly elected conservative Popular Party used its majority in Parliament to push through the package to secure a bailout package for Spain’s hobbled banks that are carrying large losses on their balance sheets due to a real estate bubble that popped in 2008, crippling the Spanish economy.
The €65billion ($80 billion USD) package includes public sector wage cuts and sales tax increases first announced last week by Prime Minister Mariano Rajoy.
By agreeing to the new terms of the package, the Spanish government is allowed to have an extra year to reach deficit-reduction targets.
Germany Supports Spanish Bailout
Earlier on Thursday, Germany’s parliament voted to support the €100 billion bailout for Spain’s indebted banking sector. The Spanish government is expecting to receive € 30 billion in a first tranche of funds that will be used immediately for rescued banks.
Germany’s parliament voted 473-97 to disburse as much as €100 billion ($123 billion) package in loans from the European Financial Stability Facility (EFSF), the euro zone’s temporary bailout facility, to recapitalize Spain’s cash-strapped banks.
Euro area finance ministers are expected to approve the € 100 billion package, although the precise figure may not be known until September.
After the parliament vote on Thursday, the Spanish treasury raised just under €3 billion in a bond auction and was left paying significantly higher interest rates to sell €2.96 billion ($3.62 billion) in bonds maturing in 2014, 2017 and 2019.