Spain Budget Cut of 7% likely

Spain's defence budget is to be cut for a third consecutive year, according to figures presented to parliament on 30 September.
Total spending is due to drop by 7 per cent, roughly in line with the overall average reduction for all government spending, to EUR7.15 billion (USD9.83 billion).
One of the main areas of savings will come from cutting basic troop numbers in the services, which were fixed in 2007 to be between 80,000 and 90,000. Instead of the projected 86,000 maximum level due to be reached this year, the number is set to be reduced by 3,000 in 2011 and probably drop again the following year as new recruitment is curtailed.
Investment in new equipment is also due to fall by EUR220 million from 2010 levels to EUR1.07 billion.
However, the MoD announced this week that it is adding EUR33 million to the budget to allow state-owned shipbuilder Navantia to start work next year on a second batch of Buques de Acción Marítima (BAM) patrol boats for the navy.
Not included in the budget spending is the new 8x8 armoured infantry fighting vehicle for the army, the contract for which was postponed this year and put back until the first quarter of 2011. Analysts say this could be because the MoD is planning to arrange a deferral of payments, as it is already has on various new contracts.
One major procurement programme that will not be affected, Defence Minister Carme Chacón said earlier this month, is the Airbus A400M military transport aircraft.
The cost of overseas military missions - including those of the NATO-led International Security Assistance Force (ISAF) in Afghanistan, the UN's UNIFIL in Lebanon and the EU's Operation 'Atalanta' off the Horn of Africa - which currently stand at around EUR750 million a year, are not included in the MoD's budget.
Although they do not have an overall majority in parliament, the ruling Socialist (PSOE) government is expected to garner enough support from regional parties to push through its overall budget cuts.
The bill is due to be approved by parliament before the end of the year.