Spain unveils its new budget for 2013 amid demonstrations against austerity.
The European Commission has welcomed spending cuts announced by Spain's government today.
Mariano Rajoy's centre-right government has been under pressure to introduce further austerity measures to cut the country's deficit and boost employment.
The new budget for 2013, announced by the government in Madrid, comprises 43 new laws to reform the economy, which stands on the brink of needing a bail-out from the eurozone.
Today's announcements, which also include the establishment of an independent fiscal authority to oversee the deficit-cutting plans, pre-empt demands that the eurozone would make as a condition of financial assistance.
Significantly, Rajoy said that all the announced measures, which are aimed at cutting €39 billion off the current 2013 budget, were in line with recommendations made by the European Commission.
Included in the budget are measures to discourage early retirement and cuts to the amount of money spent on pensions.
However Cristobal Montoro, the country's budget minister, said that welfare spending would be protected.
Olli Rehn, the European commissioner for economic and monetary affairs and the euro, said that the plan was “a major step to broaden and deepen structural reforms”.
He added: “This new structural reform plan responds to the country specific recommendations issued to Spain under the European semester and goes even beyond them in some areas.
“The reforms are clearly targeted at some of the most pressing policy challenges.
“Further enhancing the flexibility of product and labour markets will indeed be critical to boost growth and employment and to support fiscal consolidation.”
Further details of the budget will be presented to the country's parliament on Saturday.
The cuts come amid demonstrations against austerity on the streets of Madrid, and a day before independent auditors are scheduled to reveal the amount of capital missing from the country's banks.
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