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Elena Salgado, Spain's Finance Minister and newly appointed deputy PM, has commented that the country may require further austerity measures next year, if the economic crisis is to brought under control.
The initial stages of drafting next year's budget have been completed following the 3.8% cut in spending laid out in the plan, but may have to be expanded further in September which is when the government sends the budget bill to Parliament for approval.
The spending limit of 117.4 billion euros, was approved at a cabinet meeting last month by 170 votes in favour, with 145 against and 18 abstentions. The ruling PSOE party currently holds 169 of the 350 seats.
Spain currently has the third-largest deficit in the Euro-Zone, and hopes to reduce deficit from 9.2% of GDP last year to 6% for this year, and with a goal of 4.4% by the end of 2012.
The PM now has to persuade investors that he can both control the country's deficit and at the same time see out his party's term in office without an early election being called and with his party in the best possible position to secure a victory for the next administration. Being able to obtain parliamentary approval for the next budget would strengthen that position.
A poll last week in El Pais noted how 50% of Spaniards want early elections, and also showed how support for the PP currently stood at 45.9%, with the PSOE trailing with 32.1%.