Europeans are fed up with the elites and get to the streets

Spain’s parliament has passed a €15bn (£12.7bn) austerity package by just one vote, leaving the Socialist government nakedly exposed to popular fury.

Telegraph

Its glaring lack of political solidarity is the latest sign of rising resistance to deflation policies across the eurozone.

Prime minister Jose Luis Zapatero had to rely on the abstention of Catalan nationalists to push through public sector wage cuts of 5 percent this year and a freeze in 2011.

The 1930s-style pay squeeze was effectively imposed upon Spain by Brussels as a quid pro quo for the EU’s €750bn “shield” for euro zone debtors. It is a bitter climb-down for a workers party that vowed to resist salary cuts. Public sector unions have called a strike on June 8 to protest an act of “ultimate aggression” against the people.

The conservatives voted against the measures, prompting a fiery rebuke from finance minister Elena Salgado. “Unpatriotic, irresponsible, and hardly very European: one day they will pay for this,” she said.

The measures include cancellation of the €2,500 “baby cheque” and lower pension benefits. Mr Zapatero hopes to cut the deficit by an extra 1.6pc over GDP over two years, though unemployment is already 20 percent. The deficit will fall from 11.2pc in 2009 to 6pc this year.

Raj Badiani from IHS Global Insight said cuts may not be enough. The government is relying on growth projections that are “far too optimistic” to do the heavy lifting of the deficit reduction.

In Italy, the main CGIL trade union is launching two sets of strike in June to protest “unjust and unsustainable” cuts announced on Tuesday night, claiming that axe falls squarely on ordinary workers. “Those who earn over €500,000 won’t have to put up a single cent,” it said.

Premier Silvio Berlusconi said the sovereign bond scare sweeping the euro zone had forced Italy to build up a security buffer. “This crisis has been provoked by speculation and is like no other. These sacrifices are necessary to save the euro,” he said.

The €24bn austerity package (1.6pc of GDP) over two years aims to cut the bloated bureaucracy, chiefly by reducing grants to regional governments.

“Italy’s spending is out of control: this irresponsible system worked as long as we could devalue the currency,” said Mr Berlusconi. “

David Cameron: No More Power to Brussels

Times Online

David Cameron gave a blunt warning to Angela Merkel today that he would veto any attempt to reopen the Lisbon treaty to give the EU more power over national budgets.

Standing alongside the German Chancellor, Mr Cameron insisted that he wanted to see a strong single European currency but pledged to block moves to prop it up that involved a transfer of power from Westminster to Brussels.

The Prime Minister held robust and cordial talks with Mrs Merkel in Berlin where they also disagreed over hedge-fund regulation and Mr Cameron refused to reconsider his decision to pull the Conservatives out of the main centre-Right group in Europe.

The two leaders put on a relaxed show for the cameras, with Mrs Merkel’s mood buoyed by securing a “yes” vote in the German Parliament for the eurozone’s 750 billion euro bailout fund, to which Berlin will contribute up to €147 billion in loan guarantees.

But the convivial atmosphere could not mask their differences, with Germany leading calls at a finance ministers’ meeting in Brussels today for EU treaty changes to help restore confidence in the euro by introducing new sanctions and powers of co-ordination.

“There is no question of agreeing to a treaty that transfers power from Westminster to Brussels. That is set out 100 per cent clearly in the coalition agreement,” Mr Cameron said.

“Britain obviously is not in the euro and Britain is not going to be in the euro, and so Britain would not be agreeing to any agreement or treaty that drew us further into supporting the euro area.”

The Prime Minister added: “It goes without saying that any treaty, even one that just applied to the euro area, needs unanimous agreement of all 27 EU states including the UK, which of course has a veto. I think these are very important points to understand.”

His remarks left open the possibility that the 16 eurozone countries could introduce greater control from Brussels that applied just to them.

Mrs Merkel suggested that she had not given up on her desire to re-open the Lisbon treaty but played down its significance today. “There are certain ideas that Germany has tabled where treaty change plays a role. But this is the beginning. It is very early days as yet,” she said.

She added: “I have made it clear that we need to stabilise the euro but at a later stage we will be able to say what we can do and how should we do it.

“And then we will see what the majority will want and the interests of the eurozone.”

Mr Cameron showed that he had not given up trying to persuade Mrs Merkel to relax tough new proposed EU rules for hedge funds driven by Berlin and Paris.

“We do have our concerns because we do not think actually hedge funds were the cause of the problems in our financial markets and in our economies,” Mr Cameron said.

“We accept the need for regulation but it does need to be fair and proportionate.

“We have a particular issue about hedge funds that are based in other countries but have operations within one EU country and whether they would be able to access the so-called passporting system. So we have concerns; it is still being discussed.”

He refused to be drawn into open criticism of Mrs Merkel’s surprise decision this week to ban certain types of risky trading in shares and bonds, which began a slide of confidence in European shares that continued today.

Mr Cameron said: “Obviously we should respect each other’s decisions on these issues.”

“All I would say is this, and I’m sure there would be agreement on this: what matters is are we dealing with the real causes rather than just the symptoms?

“It seems to me that the cause of many of our problems in the European economies is excessive debt, excessive deficits, financial systems that haven’t worked, banking systems that have ground our economies down.

“Those are the problems. We’ve got to tackle the problems and get to the source of the problems and then actually we’ll find the symptoms will be less of a problem.”

Relations between Mr Cameron and Mrs Merkel were soured by the Conservative pull-out from the centre-Right European group over its support for closer political union in Europe.

Mrs Merkel is understood to have told him that she was saddened by the move which saw the Tories ally themselves with right-wing parties from Poland, the Czech Republic and Latvia.

Peter Ramsauer, the German Transport Minister and old Etonian, who forged links with Mr Cameron through their alma mater, said: “I have tried my very utmost best to try to keep things together. I said ‘David, can you imagine the great British Tories can be a partner of people like Topolánek from the Czech Republic? Never, ever.’ Maybe we can bring them together again. There are lingering hopes very far on the horizon.”