Spain announces plans to reduce budget deficit

According to Deutsche Welle, the Spanish government has announced that it will take further measures to address the gaping holes in the country's budget, in compliance with a spending agreement reached with the EU.

The paper says Spain is committed to reducing its budget deficit to 5.3 per cent of gross domestic product, down from the 2011 level of 8.9 per cent, with Madrid planning to impose stricter budget discipline on the country's semi-autonomous regions.

The Wall Street Journal reports the terms of the EU's €100bn bailout to Spain should allow the funds to be channelled directly to banks, shielding the government's fragile finances and easing concerns over its rising debt.

Spain's finance minister Luis de Guindos said that direct aid to for Spanish banks is conditional on the European Central Bank securing a strengthened role as the primary supervisor of the EU banking sector, according to the paper.

The Washington Post reports that €100bn in rescue loans could be rolled out within weeks, as Guindos said talks are progressing swiftly, with the terms due to be announced a meeting of eurozone finance ministers next week.

Guindos said that the overall loan, which the government retains responsibility for, will come with a favourable repayment schedule and interest rates and will be fed into Spain's banks gradually, as opposed to a single lump sum, according to the paper.

Meanwhile, BBC News reports that the number of people looking for work in Spain fell by 100,000, or 2.1 per cent, in the month of June, with the beginning of the tourist season thought to be partly responsible.

The broadcaster says Spain's unemployment is still the highest in the eurozone, with EU figures published this week showing that one in four of the Spanish workforce is out of a job, compared with the eurozone average of 11.1 per cent.