MercoPress. South Atlantic News Agency

Greece and Spain react to the Euro-pact of painful economic reforms

Tens of thousands protested in the heart of Madrid (Photo AP)

As the Euro crisis debt crisis expands, Greek Prime Minister George Papandreou appealed to parliament to support a new cabinet appointed to push through painful economic reforms, saying a debt default would be catastrophic for the country and the European Union.

In Spain on Sunday tens of thousands turned into downtown Madrid to protest recession, unemployment and a competitiveness Euro-pact which promises even more tightening.

Papandreou asked parliament to pass a vote of confidence in a reshuffled cabinet he appointed on Friday to push through a five-year package of new tax hikes and spending cuts agreed with international lenders.

The prime minister, whose own political survival is on the line over the package, said the country was at a critical crossroads and its problems could not be solved by rejecting international help.

In Madrid, marches began at six locations around the city, one at 6 am from Leganes, 13 kilometres from the centre, before convening at the Neptune plaza in front of the Prado art museum, a stone's throw from parliament.

At 1200 GMT, police put estimates in Madrid at between 35,000 and 45,000 protestors, with no reports of violence, according to national radio.

Sunday's protests have largely concentrated on the “Euro Pact”, agreed by Euro zone politicians to stimulate competitiveness across the bloc, which in Spain has prompted reforms to give companies greater power to hire and fire.

The protestors call themselves the “indignados”, meaning the “indignant” or “outraged”. Demonstrations first began before the regional elections May 22 in response to the perceived failure of politicians to represent the electorate.

The political leaders of the Euro zone's fourth largest economy have worked hard to convince investors the country will not follow Greece, Portugal and Ireland in needing a bailout. But Spaniards say while this has been happening, their own worries are being ignored.

Unemployment has soared to 14-year highs and half of under-25s are out of work. Banks have cut off credit lines, consumer prices are rising faster than the regional average, investment has been slashed and house prices have plummeted.

Meanwhile, the government has spent the last two years passing bills to keep wage rises to a minimum, lengthen working lives, abolish welfare payments and increase taxes. Since May, the protests have snowballed.

In Catalonia, which has pledged to cut spending by 10 percent this year, mass protests in front of Barcelona's parliament last week forced the region's president to be flown in by helicopter to debate where the axing would take place.