Jeff Horwich: This is not the deal many Spanish people thought they were getting. As the first batch of bailout funds arrives at Spain's banks, Prime Minister Mariano Rajoy has announced an austerity plan to slash the public deficit. This includes tax hikes and cuts to unemployment benefits. And it's fair to say this was a bit of surprise to many.
Marketplace's Steven Beard live with me from London. Hello Steven.
Steven Beard: Hello Jeff.
Horwich: So it was not long ago we reported on this grand euro-bargain, that was supposed to allow the eurozone to bail out Spanish banks directly and save the kind of austerity that's been imposed -- in Greece, for example. What happened in Spain?
Beard: It wasn’t true. It turns out, there were strings attached to the bailout in spite of the fact that the prime minster was bragging at the time he won special concessions; he was part of this new "austerity light" approach to the crisis. He has been forced to swallow a lot more austerity in return for the bailout: further cuts in public spending, a cut in unemployment benefits, for example, and a tax hike. All this in a country which is in recession and youth unemployment is 50 percent.
Horwich: What's been the reaction in Spain today?
Beard: Shock, dismay, fury. I mean, this news about the austerity package coincided, yesterday, with a protest march by coal miners who faced mine closure because of subsidy cuts. That march ended in tear gas and bloodshed -- the kind of violence we usually associate with Greece -- so very bitter mood in Spain today.
Horwich: We also have some more indications of the longer-term effects of the European recession -- in Europe and beyond. What are you hearing?
Beard: Yes, well the international labor organization says austerity in the eurozone could cost the bloc another four and a half million jobs over the next four years; the ILO is calling for an end to austerity. Meanwhile, OPEC, the oil cartel, says the growth in global demand for oil next year will slow down because of the euro zone debt crisis. It is dragging down the global economy.
Horwich: Steven Beard, in London, thank you.
Beard: OK, Jeff.