Spain

The Spanish government presented €13 billion ($16.7 billion) of spending cuts and tax increases for 2013 and said it will place new limits on early retirements as political turmoil heightens investor concerns over Prime Minister Mariano Rajoy's ability to slash a towering budget deficit and stabilize one of Europe's largest ailing economies, The Wall Street Journal reported. The government's budget plan for next year includes a share of the spending cuts and tax increases it presented in July designed to cut the deficit by €65 billion through the year 2014.

Spain's borrowing costs rose and its stock market fell sharply on the eve of Madrid's announcement of new austerity measures, putting the shaky economy again at the center of Europe's race to preserve its currency union, The Wall Street Journal reported. The government's 10-year borrowing costs rose nearly one-third of a percentage point, to above 6%, placing renewed pressure on Madrid to find a way out of its debt crisis and appearing to crimp its prospects for avoiding a bailout from its euro-zone partners.

The pressures facing the government of Prime Minister Mariano Rajoy mounted on several fronts on Tuesday, as thousands of demonstrators besieged Parliament and Spain’s two largest regions took steps that underscored their deepening economic troubles and displeasure with his austerity plans, the International Herald Tribune reported. Presenting the biggest domestic political challenge, the leader of Catalonia, Spain’s most powerful economic region, called an early election for Nov. 25 that could turn into an unofficial referendum on whether to split from the rest of the country.

EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week, the Financial Times reported. According to officials involved in the discussions, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue programme, ensuring they are in place before a bailout is formally requested.

The Spanish government proved it can still finance itself on markets, despite mounting pressure for it to seek an international bailout, The Wall Street Journal reported. The Spanish debt agency Tuesday sold €4.57 billion ($5.99 billion) of short-term debt, slightly more than planned and at a cheaper rate than at previous auctions. The result showed that Spain, one of Europe's largest fiscally frail countries, is benefitting from the European Central Bank's pledge to throw its vast financial firepower behind future European bailouts.

Spain's government is facing an autumn of angry street protests by a recession-weary public, even after telling its European partners that its next steps to overhaul the economy would avoid further cuts in public spending, The Wall Street Journal reported. Finance Minister Luis de Guindos laid out Spain's position during weekend talks in Cyprus with his European colleagues, as tens of thousands of singing, chanting Spaniards converged Saturday on Madrid from all over the country to demand a popular referendum on the government's crisis measures.

Even as the Spanish government of Prime Minister Mariano Rajoy finds itself on the front lines of the euro debt crisis, Catalonia has thrust itself to the fore of Mr. Rajoy’s domestic challenges. Catalonia is so heavily in debt that it recently asked for a emergency loan of €5 billion, or $6.47 billion, from Madrid. But here in this region with its own language and sense of identity, the financial crisis has also brought longstanding cultural and economic resentments to a boil, The International Herald Tribune reported.

Spanish Prime Minister Mariano Rajoy said Monday that a new backstop from the European Central Bank has helped to shore up confidence in the euro zone and made it less urgent for his country to seek a new bailout, The Wall Street Journal reported. "[The ECB] has sent a message that the euro is here to stay and that no country will be allowed to fall," Mr. Rajoy said in a televised interview with state-owned broadcaster TVE. "This message alone has sent borrowing costs for many European Union countries, including ours, much lower," he said.

Prime Minister Mariano Rajoy's eight months in power have been tumultuous from the start but September and October may be even tougher, with the Spanish leader assailed on all sides, Reuters reported. Internationally he is caught between diverging pressures from Germany and France, and at home he faces protests over spending cuts sought by the euro zone's big powers. France wants Rajoy to request an international bailout to prop up Spanish finances and stop the debt crisis deepening.

Spain’s prime minister is urging the European Central Bank to go ahead with a bond-buying program aimed at lowering the borrowing costs of debt-ridden governments like his own, saying in comments published Sunday that eurozone state financing rates need to be similar for the currency union to function, The Washington Post reported on an Associated Press story. The ECB holds a meeting Sept.