Greek and Spanish leaders are advancing new austerity measures even as their countrymen protest against the budget-cutting in the streets of Athens and Madrid.
After weeks of negotiation, Greece's three-party coalition government said Thursday it has reached agreement on a $15-billion plan for more pension and salary cuts and raising the retirement age for workers from 65 to 67. Greece's international lenders had demanded the new austerity package in exchange for releasing another segment of the country's second bailout in the last two years.
One of the coalition's junior partners, Fotis Kouvelis of the Democratic Left party, said Greece will attempt to win approval from the lenders to pay back its debts over a longer period of time.
"There was an agreement on basic elements, there are still some issues to be decided on. We will ask for a four-year extension of the program, and of course we will ask for safeguards against some measures that are meant to increase our revenues," said Kouvelis.
In Madrid, the Spanish government is set to unveil a $50-billion austerity plan for next year that would cut spending, boost taxes and restrict early retirements in the country's workforce.
On Wednesday, thousands of protesters filled the streets of Athens and Madrid to vent their anger at the governments' repeated efforts to trim salaries, pensions and popular social programs. In both capitals, riot police clashed with demonstrators.
Nearly a quarter of Spaniards are unemployed, with the jobless rate only slightly better in Greece. Uncertainty about the economies in both countries has sent borrowing costs soaring for the Spanish and Greek governments. Spain's finance ministry also reported Wednesday that the country is sinking deeper into recession.
Budget crises have already forced Greece, Ireland and Portugal to secure international bailouts, and analysts say the Spanish government could be next, joining its banking system in seeking a rescue package.