The Spanish government announced fresh austerity measures on Wednesday. Bloomberg reports:
[Spanish Prime Minister Mariano] Rajoy announced cuts in unemployment benefits and public wages, signaled reductions in pensions and raised sales taxes as part of a 65 billion-euro ($80 billion) package of deficit cuts, risking a deeper recession. As striking miners clamored for aid to keep their industry alive in a march along Madrid’s main boulevard, Rajoy trimmed union funding by 20 percent.
The measures may risk a deeper recession but markets reacted favourably on Wednesday.
Spain’s benchmark Ibex stock index rose 1.1 percent and the risk premium on 10-year government debt compared to the German benchmark slid 17 basis points to 531 points at 5 p.m. Madrid time.
In any case, slower growth in other economies did not stop US exports from rising in May. The trade deficit shrank 3.8 percent in May as exports rose 0.2 percent to the second highest on record while imports fell 0.7 percent.