Spain\'s PM defends austerity cuts

Spanish Prime Minister Mariano Rajoy says he will stick to the austerity cuts as planned for 2012 following the recent nationwide general strike against the tough economic measures. “Reducing the public deficit to 5.3 percent this year is absolutely indispensable, a goal which we will not renounce,” he said at a meeting of his Popular Party. Rajoy’s budget for 2012 -- approved by his cabinet on Friday -- includes 27 billion euros ($36 billion) worth of spending cuts and tax hikes. The budget freezes public sector wages, raises taxes on tobacco and closes tax loopholes and rebates for large companies. It is Spain\'s most austere budget since the country returned to democracy following the death of dictator General Francisco Franco in 1975. Most analysts say Spain will need austerity measures worth around 50 billion euros if it is to meet its deficit target for this year. On Thursday, anti-austerity strikers took to the streets of several cities across the country to protest against the government\'s tough new labor reforms, which facilitate lay-offs. Batered by the global financial downturn, the Spanish economy collapsed intorecession in the second half of 2008, taking down millions of jobs with it. Analysts say Spain\'s economy is expected to enter into a new recession in the first two quarters of 2012.