Bringing respite to the debt-crisis in the euro zone, the Spanish parliament has approved for a 15 billion euro austerity plan which aims at reducing the government’s budget deficit and regain confidence in the market on Thursday.
The United States and China also backed the European markets as the euro was up by 1.6 percent against the US Dollar and 1.4 percent against the Chinese Yen, after the main stock index had risen by 2.9 percent. The Euro had fallen to a four-year low against the US dollar as it lost about 8 percent this month, as the climbing Greek deficit had initiated a sell-off in the euro zone.
According to the BBC, the highly unpopular bill according to which all civil servants will have a 5 percent pay cut, was approved by just a single vote in the parliament in which 169 members voted for, 168 against and 13 abstained from voting. The bill got the support of the Socialist party which is in power, whereas all other parties including the Popular Party either opposed or abstained from voting.
AP reported that Spain’s Finance Minister Elena Salgado had requested the parliamentarians to vote in favor of the bill, terming it as ‘painful but inevitable’. Apart from the pay cut, parents will no longer be given 2500 euro for the birth of children, which was an step taken by Prime Minister Jose Louis Rodriguez Zapatero to help increase the falling birth rate in Spain.
As per the bill, the salaries of the Prime Minister and the government ministers will be slashed by 15 percent and those of secretaries of states by 10 percent. The bill is expected to bring down the deficit of 11 percent of the GDP at the moment to 6 percent by the end of 2011.