Savage Spanish cuts will stoke a fire that no firewall can keep at bay

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THE Spanish government is to cut 27bn euros (£22.5bn) from its budget this year. Among the measures are the freezing of public sector workers’ salaries and a reduction of departmental budgets by 16.9%.

The Deputy Prime Minister, Soraya Saenz de Santamaria, said the nation was in an ‘extreme situation’.

She means that the government is poised not only to cut wages, but to completely deregulate the capitalist economy with a view to creating a bosses’ paradise where they can hire and fire at will, and at subsistence level wage rates.

On the one hand, she made her announcement just one day after the biggest general strike in the history of post-Franco Spain, a strike that was directed against the measures that she is bringing in.

Millions of industrial workers stopped work and there were 900,000-strong rallies in Barcelona and Madrid as well as clashes between strikers and the police.

On the other hand, bourgeois economists are already dismissing the savage cuts as ‘not big enough’ to satisfy Germany, France and the European Central Bank.

The inadequate measures include: ministerial budgets being cut by up to 50%, civil servants wages being frozen, electricity bills jumping by seven per cent and gas bills by five per cent, while unemployment benefit is frozen and income tax increases by 1.9 per cent.

Javier Diaz Gimenez, professor of economics at IESE Business School in Madrid, said: ‘This budget seems to be non-credible. They will not be making the 5.3% target agreed with Brussels, because the cuts are insufficient given the growth forecast.’

Last month Prime Minister Mariano Rajoy agreed with the European Commission to reduce Spain’s deficit from 8.5% to 5.3% of GDP in 2012.

Further cuts will be needed before very long, and then Spain will be plunged into an indefinite general strike where the working class will be posed with taking power and bringing in socialism.

There are already objections that the latest spending cuts will further damage the Spanish economy and throw it even further backwards, steepening its downward spiral movement, rather like what is happening in the UK, but on a much larger scale.

A further slowdown will bring horrific levels of unemployment. Already there is an adult unemployment rate in Spain of 25 per cent and a youth rate of 50 per cent.

At the same time as the Greek, Italian, Portuguese, Irish and Spanish crises are rapidly worsening, Eurozone ministers are currently desperately seeking to create a ‘firewall’ that will be able to prevent the flames from the crisis-ridden states, leaping over the borders to bring down the German, French and UK banks.

The ministers, meeting in Copenhagen, have decided to boost the joint lending power of the ‘firewall’ to 800bn euros.

However, last week European leaders were urged eloquently by Angel Gurria, the head of the OECD economic organisation, to erect ‘the mother of all firewalls’ to protect the eurozone melting away from the flames of financial contagion.

They were told: ‘When dealing with markets, you must overshoot expectations. . . The mother of all firewalls should be in place, strong enough, broad enough, deep enough, tall enough, just big.’

There is no such firewall available to keep the deepening crisis away from the EU as a whole.

It’s crisis is set to deepen. It has spread from Greece to Italy, Portugal and Spain and is set to leap over the frontiers to set the rest of the EU ablaze, fuelled by billions of just-printed euro notes.

The only solution to this crisis is to bury EU capitalism through the victory of the European socialist revolution as part of the world socialist revolution.