Spanish PM Mariano Rajoy Spanish PM Mariano Rajoy has announced a sales tax rise as part of austerity measures aimed at cutting the public budget by 65bn euros (£51bn; $80bn). VAT will go up almost immediately from 18% to 21% and there will be a 3.5bn euro cut in local authority budgets. EU officials welcomed the changes, made in return for a eurozone bank bailout and an extension to Spain's deficit reduction targets. But thousands of miners are protesting in Madrid against government measures. Eurozone finance ministers have agreed to provide 30bn euros (£24bn) for Spain's troubled banks by the end of the month and to give Madrid an extra year - until 2014 - to hit its budget targets. The prime minister, interrupted several times by opposition MPs, told parliament that the measures he was announcing had to be adopted without delay. The package of tax rises and spending cuts would cut the budget by 65bn euros over two-and-a-half years, or 6.5% of GDP, he said. "The excesses of the past are being paid for right now," he said, adding that Spaniards had never before experienced such a recession. Without a cut in Spain's budget deficit, public services would be put at risk, he said. Savings of 3.5bn euros will be made to government administration budgets, with local authorities banned from offering services they cannot afford and the number of councillors reduced by 30% in some areas. The door had been opened to a new EU model, he said, and the summit agreements had committed everyone equally. Spain's unemployment is running at more than 24% and analysts say European leaders want to see a credible Spanish plan for viability and deficit reduction. "What animates us is the five million people out of work," Mr Rajoy told parliament. The European Commission praised the Spanish government's "determination" and swift action. "It's an important step to ensure that the fiscal targets for this year can be met," spokesman Simon O'Connor told reporters.
