rumour: Spanish Government May Backtrack On Austerity, Attempt To Close Gap With Big Tax Hikes

According to a source in Spain, the socialist government of Prime Minister Zapatero is now seriously considering pulling back on its plans to run an austerity budget.

Instead, the government may just be planning massive tax hikes, as popular unrest over its planned budget cuts grow.

European markets are selling off at the moment, with the Spanish IBEX down nearly 5.5%.

This may be due to the ECB halt in purchasing Spanish and Italian government debt, after it believed confidence had returned to the market.

The cuts aren’t pretty, check out what the Spanish austerity budget would look like in America >

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