Thousands protest austerity cuts in Portugal, Spain

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Tens of thousands of Portuguese took to the streets of Lisbon on Saturday to protest the government's financial policies, as thousands of Spaniards turned out for their own anti-austerity marches.

In Lisbon, tens of thousands turned out to protest an austerity programme that is expected to get even tougher to meet pledges given to the country's international creditors.

And in neighbouring Spain, thousands of protesters rallied in Madrid, where the government submitted an austerity budget and warned that the public debt and deficit were set to rise far higher than previously forecast.

Protesters in Lisbon filled the central Praca do Comercio square at the call of the main CGTP trade union to demonstrate against "the theft of wages and pensions."

Portugal's Finance Minister Vitor Gaspar has indicated the government will announce new measures including spending cuts and capital tax hikes to meet deficit targets.

Portugal has to meet the targets to receive more funds under a bailout worth 78 billion euros ($100 billion) from international lenders.

CGTP secretary general Armenio Carlos called for unity among all those hit by the policy. Union leaders would meet Wednesday to discuss whether to call a general strike, he said.

The new tax hikes are expected to bridge a two-billion-euro gap in planned savings after the constitutional court ruled against a move to cut civil servants' end-of-year bonuses.

Demonstrators in Lisbon blew on whistles and beat drums as they shouted "Down with Austerity" and waved the flags of unions representing local government workers, teachers and even police.

"Our future is being mortgaged by the demands of the troika," 56-year-old government employee Francisco Lopes said, referring to the European Union, the European Central Bank and the International Monetary Fund behind the bailout.

"The Portuguese people are fed up with it."

Prime Minister Pedro Passos Coelho's government met Wednesday to examine proposals to raise taxes instead of enacting painful wage cuts.

A plan to slash take-home pay by raising employees' social charges from 11 to 18 percent while cutting employers' contributions from 23.75 percent to 18 percent, had to be abandoned in the face of fierce opposition.

The government is instead looking at a rise in revenue tax and new taxes on capital and assets, measures that would have to be approved by the troika.

After Wednesday's seven-hour meeting, the cabinet, said the government's proposed 2013 budget would be presented to parliament before October 15.

The economy has shrunk by 1.2 percent in the second quarter, much faster than the 0.1 percent rate in the first quarter, and that contraction is expected to reach 3.0 percent for the whole year.

At the start of the month, Portugal's international creditors agreed to relax the public deficit target for all of 2012 to 5.0 percent from an initially agreed 4.5 percent.

But Portugal's deficit came in at 6.8 percent of GDP for the first half of the year, according to official figures released Friday.

In Madrid, protesters called on politicians to resign as they massed outside the Congress of Deputies on Saturday evening, facing off with riot police and denouncing the conservative government's deep budget cuts.

Protesters held up signs that said simply "No", "Resign" and "Democracy" and shouted toward the legislature: "They do not represent us."

Spain's crisis, blamed on the collapse of a speculation-driven real estate boom, has plunged the country into recession, throwing millions out of work and many families into poverty. Unemployment is close to 25 percent.

The government had more bad news Saturday, when Budget Minister Cristobal Montoro said debt was now predicted to reach 85.3 percent of gross domestic product in 2012 and 90.5 percent in 2013.

The deficit meanwhile was revised to 9.44 percent of GDP from 8.9 percent and was predicted to hit 7.4 percent instead of 6.3 percent this year.

The budget approved by Prime Minister Marian Rajoy's right-wing cabinet on Thursday tightens austerity in the teeth of the growing protests, easing the path to a widely expected sovereign bailout.

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