Police And Protestors Clash On Madrid March

Police have clashed with miners protesting against a new round of austerity measures in Spain, amid rising anger over the country's dire economy.

Spain's Prime Minister went to parliament to confirm further, painful, tax increases as thousands of miners took to the streets of Madrid, many of them having walked for weeks to make a new protest against subsidy cuts.

Riot police fired rubber bullets in an attempt to disperse the demonstrators after they began to throw stones and bottles at them.

Retired miner Olvidio Gonzalez, 67, was hit in leg by a rubber bullet. Rescue workers took him away on a stretcher. 

"We were walking peacefully to get to where the union leaders were speaking and they started to fire indiscriminately," he said.

"There was no warning."

Another protester, Santiago Oviedo, 24, said he saw protesters throwing fireworks, bottles and cans at police behind a cordon outside the ministry.                    People panicked and ran, Oviedo said, adding that he saw a few people get hit by rubber bullets.

At least three people have been detained as a result of the clashes, a police spokesman said.

The country's leader, Mariano Rajoy, is also reportedly under pressure over the prospect of small savers losing billions of euros through a write-off of certain bank debts.

According to a draft memorandum of understanding, seen by the Financial Times, losses within a number of controversial savings products would have to be written off in return for a bank securing bailout funds.

The country's banks were granted 30bn euros (£23.7bn) of up to 100bn promised by eurozone finance ministers to help them recapitalise after enduring huge losses on the collapse of the country's property boom.

In Parliament, Mr Rajoy was forced to confirm further spending cuts to demonstrate to his European partners that his country was committed to tackling its deficit and avoiding the need for a state bailout.

His plan was aimed, he said, at trimming the public budget by 65bn euros (£51bn) over the next two-and-a-half years as part of efforts to meet an extended EU target of reaching a public deficit target of 3% of GDP by 2014.

Value-added tax (VAT) would be raised by three percentage points to 21%, he confirmed.

The reforms also included a tax scheme for the energy sector that would force companies and consumers to share higher bills.

Rajoy also said he may privatise airport, railway and port assets.

With the economy in recession, unemployment high at almost 25% and tax income falling, Spain is said by analysts to be struggling to meet even its relaxed deficit targets.

The announcements helped ease pressure on Spanish borrowing costs, with the yield on its 10 year bonds falling further from the so-called danger zone of 7% earlier this week to 6.77%.

Sky's economics editor Ed Conway said the prime minister's reforms amounted to the fourth round of austerity in just seven months and were a consequence of Spain's inability to devalue because of its euro membership.

He said: "it is difficult to see how much more austerity will help it get out of the biggest recession, potentially depression, that they have faced in recent history".

:: The International Labour Organisation (ILO) has warned eurozone nations they must act now to prevent creating a further 4.5 million unemployed workers in the next four years.                 "The eurozone is facing its worst crisis since the creation of the single currency," ILO Director-General Juan Somavia told reporters.

He said he had long warned against austerity measures as a way out of financial difficulties and added that unless all eurozone members embraced a growth strategy with jobs at its core, even the wealthiest countries would be hit.