Abstract

The economic position and monetary terms of Spain have been devastating in the past few years that facilitated the integration of austerity measures in Spain. This research study aims at analyzing certain aspects of austerity plans being implemented in Spain to cope up with economic recession prevailing in Spain. The study will examine the reasons for implementation of austerity plans in the Spain, public reaction, and most importantly the European Union's drastic pressure on Spain to cut down the debt deficits for meeting the fiscal targets set for year 2012.

Table of Contents

Abstractii

Introduction1

Reasons for Austerity Plan2

Austerity Plan: What is voluntary?3

Requirements for Austerity plan by European Union4

Reactions to Austerity Plan5

Effectiveness of the Spanish Austerity Plans6

Works Cited8

Austerity Plan for Spain

Introduction

Spain has been one of the strongest European economies in the Europe until 2008. But it entered into a worst period of economic recession in 2009(Edward, 2012). The global intelligence company STRATFOR recognized four European countries as the obvious victims of financial breaks in 2011 including Austria, Spain, Belgium and Portugal who are in drastic need of EU bailouts(ISCTRC, 2011). After going through the financial recession and monetary crises coupled with unemployment rate at 24.4 percent and falling tax revenues, Spain is under great pressure to cut down the deficit in the shortest possible span of time. The extreme deficits and unstable banking system of Spain is now the focus of eurozone's debt upheaval because investors are afraid that Spain would fall in need of a sovereign bailout to cope up with crippled economy. According to a report of United Nations, Spain is one of the most economically discriminated countries in the whole European Union because of unequal distribution of income among the poor and rich(Kitson et.al, 2011, pp.291). The consistent requests from the Spanish Prime Minister Mariano Rajoy for rescue funds to European Union and incredibly high debt rate has triggered the European Union to propel Spain for adapting austerity measures seriously.

The Rjoy began to play his role as a serious supporter of austerity plan in Spain when the fourth strongest economy of Eurozone got stuck in financial recession with unemployment rate increased to 24 percent(Reuters, 2012). Rajoy had to file formal successions for collaborated action from the European Union to release rescue funds. A rescue maneuver of European Union purchasing of Spanish bonds could reduce economic tension in Spain but the extreme public reactions towards the budget cuts being integrated in the operational strategies of Spain dragged the Spanish public on roads for vigilant protests. The socialist opposition refused to agree on a rescue fund amounting to €100 billion for stabilizing the Spanish banks and it also opposed sovereign bailout leading to exacerbation of economic crises in Spain.Rajoy is being condemned in the several public and official spheres of Spain for his approach towards crises management because Spain dug deeper into the eurozone debt disaster. The borrowing cost of Madrid have ascended in the last months with a surplus on the Governmnet's 10 year bond violation to 7 percent which is considered as ...