Spanish Government to Unveil 'Very Austere' Budget

The Spanish government is due to unveil what is expected to be one of the toughest budgets in its recent history.

The Spanish government is due to unveil what is expected to be one of the toughest budgets in its recent history.

Picketers scuffle with police as they try to block the entrance of a regional government building during Spain's general strike in Santander March 29, 2012.

Newly-elected Prime Minister Mariano Rajoy has already warned the budget will be "very austere".

The global financial markets are increasingly concerned that Spain's debts are becoming unmanageable.

On Thursday, Spanish police clashed with protesters after a general strike was held to protest against labour reforms designed to cut unemployment.

Road, rail and air transport were all affected, with domestic and European flights cut to a fraction of their normal levels.

Bailout fears

Spain, which is suffering from the highest levels of unemployment in Europe, is under intense pressure from eurozone leaders to reduce its deficit.

Correspondents say there is concern that if the situation does not improve, Spain might eventually need a bailout.

The BBC's Gavin Hewitt in Brussels says the cuts are expected to be around 35bn euros ($46.5bn; £29bn), and that health and education funding are unlikely to escape.

Budget Minister Cristobal Montoro said it would be the most austere budget since Spain became a democracy.

"It needs a budgetary effort that up to now we have probably never made in our country."

On Thursday, police clashed with demonstrators as hundreds of thousands swamped streets in Barcelona and other cities.

Unions said 800,000 people joined the protest in Barcelona. Police put the number at 80,000.

Some marchers in the city smashed windows and set rubbish bins alight. Police fired tear gas and shot rubber bullets at the ground, TV pictures showed.

In the capital, Madrid, unions said around 900,000 people took part. The government did not give a figure.

'Not yielding'

Our correspondent says the size of the demonstrations on Thursday were an indication that many are losing patience with austerity.

Unemployment in Spain is currently the highest in the EU at 24%. Nearly half of Spain's under 25s are out of work.

The general strike was the government's first big challenge since Mariano Rajoy took office after elections last November.

Despite the opposition, the government says it is committed to reining in its spending.

"The question here is not whether the strike is honoured by many or few, but rather whether we get out of the crisis," Mr Montoro said.

"That is what is at stake, and the government is not going to yield."

The budget comes on the same day that eurozone finance ministers meet in Copenhagen to discuss the bloc's bailout fund, designed to protect itself against individual members being unable to repay their debts.

However, analysts say long-standing differences between some members, in particular France and Germany, mean there is no guarantee an agreement will reached.