Spain closes public companies to trim budget deficit | Business| Economy and finance news from a German perspective | DW | 18.03.2012
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Spain closes public companies to trim budget deficit

The Spanish government has confirmed that it will shut down 24 public companies in a bid to ease the country's budget worries. The measure was announced amid new alarming debt figures.

The Spanish government on Friday announced the closure of 24 public companies in an attempt to help bring down spiraling public deficit.

The firms affected by the austerity measure will include the Public Renting Society, a body created to act as an intermediary between landlords and tenants. Also on the list of planned closures are a lottery sales firm and a maritime towing company.

"There are companies with more people sitting on their boards of administration than they have staff," Deputy Prime Minister Soraya Saenz de Santamaria said in a statement.

Madrid also plans to cut spending for other state-run enterprises, meaning that altogether 45 companies will be affected, which represents a third of the total of such firms in Spain. The announcement came amid painful endeavors to cut the country's budget deficit from 8.5 percent of gross domestic product in 2011 to 5.3 percent this year - a level agreed between the Spanish government and the European Union.

More dire news

Drastic spending cuts estimated at more than 35 billion euros ($45 billion) are required to reach that goal. Madrid is to unveil its 2012 budget on March 30.

The Bank of Spain reported on Friday that national public debt rose by 14.2 percent in 2011, accounting for 68.5 percent of gross domestic product (GDP). It's the highest level logged ever since statistics in the current format were issued back in 1995.

The bank warned that the situation in Spain's 17 regions was particularly alarming, with accumulated debt rising to 140.1 billion euros last year, up from 11.4 percent a year earlier.

Spaniards have signaled they're willing to put up some resistance to the government's austerity measures. Protests are already mounting in many regions, and trade unions have called a general strike for March 29.

hg/sms (dpa, Reuters)