Protest, rising bond costs beset Spain

Police stand guard outside the parliament building in Madrid on Tuesday ahead of a demonstration against austerity measures announced by the Spanish government.
Police stand guard outside the parliament building in Madrid on Tuesday ahead of a demonstration against austerity measures announced by the Spanish government.

— Spain’s government was hit by the country’s financial crisis on two fronts Tuesday as thousands of protesters angered by austerity cutbacks and tax increases marched on parliament while its borrowing costs increased in an auction of its debt.

More than 1,000 riot police blocked off access to the parliament building in the heart of Madrid, forcing the bulk of protesters to stay in a nearby square. Police used batons to push back some protesters at the front of the march as tempers flared.

The demonstration, organized with an “Occupy Congress” slogan, drew protesters weary of nine straight months of painful measures imposed by Prime Minister Mariano Rajoy.

Thousands of angry marchers yelled toward parliament, about 270 yards away, “Get out! Get out! They don’t represent us! Fire them!”

“The only solution is that we should put everyone in parliament out on the street so they know what it’s like,” said one of the protesters, civil servant Maria Pilar Lopez.

Lopez and others are calling for fresh elections, claiming the government’s hardhitting austerity measures are evidence that the ruling Popular Party misled voters to get elected last November.

While Rajoy has said that he has no plans to cut pensions for Spaniards, Lopez fears her retirement age could be raised from 65 to as much as 70. Three of her seven nieces and nephews have been laid off since Rajoy took office, and she said the prospect of them finding jobs “is very bleak.”

Spain is struggling in its second recession in three years with unemployment near 25 percent. The country has introduced austerity measures and economic reforms in a bid to persuade its euro partners and investors that it is serious about reducing its bloated deficit to 6.3 percent of gross domestic product in 2012 and 4.5 percent next year.

The deficit reached $64.79 billion, equivalent to 4.77 percent of GDP, through August, the government said Tuesday. Secretary of state for the budget, Marta Fernandez Curras, said the deficit “is under control.”

Spain has been under pressure from investors to apply for European Central Bank assistance in keeping its borrowing costs down. Rajoy has yet to say whether Madrid will apply for the aid; he’s reluctant to ask since such assistance comes with strings attached.

Concerns over the country’s public finances were evident earlier Tuesday when the Treasury sold $5.14 billion in short-term debt but at a higher cost.

It sold $1.8 billion in threemonth bills at an average interest rate of 1.2 percent, up from 0.95 percent in the last such auction Aug. 28, and $3.34 billion in six-month bills on a yield of 2.21 percent, up from 2.03 percent.

The government is expected to present a new batch of reforms Thursday as it unveils a draft budget for 2013.

Business, Pages 25 on 09/26/2012

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