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Spain leader vows hard line as hundreds of thousands protest austerity

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And the austerity pains are unlikely to abate anytime soon. Despite Spain's contracting economy amid years of austerity, the European Union has been emphatic that it will not budge on its order that Spain cut its deficit to 3 percent of GDP by 2013, although it has been flexible about targets for this year.

The political costs of being in government

But toeing the EU line now comes with political costs. Mr. Rajoy, whose party handily won national elections in November, is losing political support on several fronts.

In March 25 regional elections, his Popular Party failed to boot the Socialists from power in their historic bastion of Andalucia, Spain’s most populated and second-biggest autonomous region. Polls suggested a landslide victory from Rajoy’s party and the government went as far as defying Europe by delaying its 2012 budget proposal and its most severe cuts until after the vote to secure the win.

In the end, though, most of the votes the Socialists lost went to other parties, exposing the political cost of the economic reforms Rajoy's party instituted in its first 100 days of government.

Rajoy is also facing internal dissent from the more conservative wing of his party, which is demanding even more austerity, on top of a reversal of the hallmark liberal social policies of the previous government, including abortion and education reform.

But the government, through Labor Minister Fátima Báñez, made it clear it will not backtrack just hours before tomorrow's 2012 budget presentation, when it will reveal the details of its budget.  

“The reformist path is unstoppable,” Ms. Báñez said. The party already won an absolute majority in Parliament, “the home of dialogue and negotiation,” she said, suggesting the government has no need to negotiate.

“This is not going to stop,” says Fermín Bouza, sociology professor in the Universidad Complutense de Madrid, and an expert in voter sentiment and public opinion.

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