Spain’s prime minister is announcing a new plan to tackle his country’s budget crisis, amid concerns that problems afflicting Greece may spread.
Speaking in parliament, PM Jose Luis Rodriguez Zapatero is outlining cuts aimed at bringing down Spain’s borrowing levels.
The budget deficit is currently 11% of GDP. On Monday Spain said it planned to cut it by 4.7% by the end of 2011.
Fears Greece’s problems would erupt elsewhere has put pressure on the euro.
Spain’s unemployment rate exceeds 20% – twice the eurozone average.
The BBC’s Sarah Rainsford in Madrid says Mr Zapatero approved an austerity package in January but that since then little has happened, and Madrid is now under pressure from the European Commission to deliver.
Recruitment freeze
The European Union is anxious to see more fragile European economies including Spain, Portugal and Greece impose tougher austerity measures.
On Sunday it approved a massive 750bn euros ($975bn; £650bn) rescue package to prop up European economies struggling with large debts.
Spain has already agreed to speed up its deficit cuts – saving an additional $6.3bn this year, and double that the year after.
The measures to be announced are expected to include big cuts to spending, as well as higher taxes.
There is also expected to be a freeze on recruitment in the public sector, as outlined in the January measures.
So far, our correspondent says, Mr Zapatero has shied away from really painful measures, hoping instead to rely on tax rises, efficiency gains, and economic growth.
But our correspondent adds that many believe this is optimistic and that now they, and the markets, are poised to see whether Mr Zapatero is prepared – for more drastic action.
Spain’s economy is expected to shrink this year by 0.4%, according to the European Commission.
