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Spain's budget for 2013 includes new austerity measures including tax hikes and deep spending cuts.
Spain's budget for 2013 was released Thursday, amidst growing social unrest and pressure from European Union members and the markets.
Spain has been experiencing violent protests over the austerity measures imposed by Prime Minister Mariano Rajoy, as he rushes to meet his bailout commitment of slashing $23.2 billion off the country's deficit by next year, Bloomberg Businessweek reported.
Rajoy's government has also said it plans to cut the deficit to just 4.5 percent of Spain's GDP by 2013: it was at 6.3 percent in 2012, and 9 percent in 2011, according to the Wall Street Journal.
"We know what we have to do, and since we know it, we're doing it," Rajoy said on Wednesday from New York, as protests in Madrid and threats by northeastern Catalania region to secede boiled over back home. "We also know this entails a lot of sacrifices distributed... evenly throughout Spanish society," Reuters reported.
According to Spain's deputy prime minister Soraya Saenz de Santamaria, speaking at a press conference Thursday, the reforms include 43 new laws to safeguard the country's economy, and 64 percent of the measures in the new plan are "social spending."
Saenz also said the budget focuses more on spending cuts than tax hikes, Business Insider reported.
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The economic outlook in Spain continues to be a grim one: according to the Bank of Spain's monthly report, released Wednesday, "Available data for the third quarter of the year suggest output continued to fall at a significant pace, in an environment in which financial tension remained at very high levels," BBC News reported.
Richard C. Eichenberg, a political science professor at Tufts University, told GlobalPost that the great threat to the economy now is austerity without growth.
"The greatest threat to the Spanish banks is the fact that for the foreseeable future … the prospects for any real growth in the Spanish economy are dim," he said.
Spain's second biggest bank, BBVA, estimated in a report released last week that another $78 billion was required to bail out the country's banking institutions.
Over 6,000 Spaniards took to the streets Tuesday to express their frustration with continued austerity measures, and are expected to do so again as the new budget is announced, CNN reported before the announcement.
In Madrid's Neptuno Square, the center of the protests, 28 people were injured Tuesday, including two police officers, and 22 people were arrested.
Thursday night in Madrid small groups of police and protestors clashed. (Seen here at 1:15.)
This public anger over Rajoy's policies is expected to continue.
“Rajoy is likely to face a very tough end of year in terms of social discontent,” Antonio Barroso, a political analyst at Eurasia Group in London and a former Spanish government pollster, told Bloomberg. “Protests are likely to continue in the future, and the overall degree of mobilization could increase if trade unions decide to call for a general strike.”
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