New protests in crisis-hit Spain as debt, deficit to surge

MADRID: Thousands of protesters rallied again Saturday in Spain, where the government submitted an austerity budget and said the public debt and deficit are set to rise far above earlier forecasts.

Chanting that politicians must resign, the demonstrators massed outside the Congress of Deputies in Madrid in the evening, facing off with riot police and denouncing the conservative government's deep budget cuts.

Rallied by the Indignants protest movement and organised on social media, the protesters held up signs that said simply "No", "Resign" and "Democracy" and shouted toward the legislature: "They do not represent us."

On Tuesday helmeted riot police fired rubber bullets and baton-charged protesters as thousands rallied near parliament in anger at the economic crisis in clashes that left at least 14 people wounded.

The crisis, blamed on the collapse of a speculation-driven real estate boom, has plunged Spain into recession, throwing millions out of work and many families into poverty. Unemployment is close to 25 percent.

Amid the gloom, the government had more bad news Saturday, when Budget Minister Cristobal Montoro said debt was now predicted to reach 85.3 percent of gross domestic product in 2012 and 90.5 percent in 2013.

The deficit meanwhile was revised to 9.44 percent of GDP from 8.9 percent and was predicted to hit 7.4 percent instead of 6.3 percent this year.

The budget approved by Prime Minister Marian Rajoy's right-wing cabinet on Thursday tightens austerity in the teeth of the growing protests, easing the path to a widely expected sovereign bailout.

"The budget must act as a lever to overcome the crisis and restore confidence in Spain," Montoro said Saturday as the budget was submitted to parliament. "It must open the way to growth and job creation in the country."

Montoro blamed the ballooning deficit on state aid to Spain's fragile banks, which have been reeling from bad debts since the property bubble burst in 2008.

But Montoro added that Madrid expected this aid to be repaid, allowing Spain to make good on its pledge to the European Union to return the deficit figure for 2012 to 6.3 percent of GDP.

Protesters say the policies of Rajoy's conservative government, including pay cuts and sales tax rises to rein in the public deficit, hurt the poor unfairly.

The offer of a loan of up to 100 billion euros ($125 billion) by Spain's eurozone partners to rescue the country's stricken banks has fanned their anger.

Spain said Friday after an independent audit that its banks need 59 billion euros ($76 billion) to fix their balance sheets, but may need to borrow "only" 40 billion euros from the eurozone.

At Saturday's rally, Nuria Camacho, 40 -- a former pharmaceutical company worker who has been unemployed for three months -- said she had been at all the Indignados demonstrations since they started in April 2011.

"Since the government came in a few months ago, there have been nothing but cuts, in health, in education," she said, adding that the university fees for her 20-year-old son, a philosophy student, had gone up this year from "600 or 700 euros to 1,400."

"My parents, who live off very small pensions, must now pay for their medications," the protester said.

"We must take to the streets every day," she said. "I think we can get the government to reverse" its measures.