Spain raises Vat as part of €65bn austerity plan

Recession-plagued Spain unveiled austerity measures yesterday designed to slash €65bn from the public deficit by 2014 as Prime Minister Mariano Rajoy yielded to EU pressure to try to avoid a full state bailout.

The conservative leader announced a 3-point hike in the main rate of Vat on goods and services to 21% and cuts in unemployment benefits and civil service pay and perks in a speech interrupted by jeers and boos from the opposition.

“These measures are not pleasant, but they are necessary. Our public spending exceeds our income by tens of billions of euro,” he told parliament.