Spain Raises Value-Added Tax to Whopping 21% (EWP)

Officials in Spain announced a new round of austerity measures worth an estimated €65 billion. Value-added tax in the country was increased to 21 percent from 18, jobless benefits were slashed, and state employee salaries took a haircut. The harsh cuts will help the country reduce its budget deficit, and some say it is meant to appease so-called bond vigilantes who have forced yields on Spanish 10-year bonds as high as 7 percent recently. Many fear that the steep new austerity measures in Spain will lead to a continued contraction in the economy.

iShares MSCI Spain Index (NYSE: EWP) is lower by 8.54 percent in the past 5 days.

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