Spain Rolls Out Painful New Austerity Measures

Spanish Prime Minister Mariano Rajoy today announced tough new austerity measures that will reduce the country's budget deficit by $80 billion over the next two and a half years. Spain has been having a tough time meeting agreed-upon deficit targets, the New York Times reports, but yesterday eurozone finance ministers eased this year's target to 6.3% of GDP. The new austerity measures include an increase in the value-added tax from 18% to 21%, which Rajoy had previously opposed.

"I know these are not pleasant measures, but they are necessary. The circumstances have changed and I have to adapt," Rajoy said. "Growing and creating jobs isn’t possible today. The outlook is truly somber." Jobless benefits and state employee pay were also cut, the Wall Street Journal notes, and local government reforms are also expected to save billions. Next year's deficit target is 4.5%, while 2014's is 2.8%. (More Mariano Rajoy stories.)