Tens of thousands of angry Greek protesters filled the streets of Athens on Tuesday to greet German Chancellor Angela Merkel, who offered sympathy but no promise of further aid on her first visit since the euro crisis erupted three years ago.

As police fired tear gas and stun grenades to halt angry crowds chanting anti-austerity slogans and waving swastika flags, Merkel's host, Prime Minister Antonis Samaras, welcomed her as a "friend."

Blamed by many Greeks for imposing draconian budget cuts in exchange for aid, Merkel reaffirmed Berlin's commitment to keep the debt-crippled Greek state inside Europe's single currency.

"I have come here today in full knowledge that the period Greece is living through right now is an extremely difficult one for the Greeks and many people are suffering," Merkel said during a joint news conference with Samaras just a few hundred yards from the mayhem on Syntagma Square, outside parliament.

"Precisely for that reason I want to say that much of the path is already behind us," she added, offering a public display of support to Samaras's three-month-old government on her first visit to Greece since 2007.

Reuters

Police try to disperse protesters reacting to the visit of Germany's Chancellor Angela Merkel in Athens on Oct. 9.

She tried to reassure her hosts that their reforms would eventually pay off, but also made clear that Greece, which has seen its unemployment rate surge to nearly 25 percent and economic output shrink by a fifth, would not solve its problems overnight.

Angela Merkel greeted warmly by prime minister, but not by Greeks

Samaras promised to implement economic reforms necessary to restore confidence: "The Greek people are bleeding but are determined to stay in the euro," he said.

"All of those who made bets that Greece would fail... will lose," Samaras added, according to Spiegel.

On the other side of the parliament building, tens of thousands of demonstrators defied a ban and gathered to voice their displeasure with the German leader, whom many blame for forcing painful cuts on Greece in exchange for two European Union/International Monetary Fund bailout packages worth more than 200 billion euros ($260 billion).

Greek police fired teargas and stun grenades when protesters tried to break through a barrier to reach the cordoned-off area where Merkel and Samaras were meeting. Some demonstrators pelted police with rocks, bottles, paint bombs and sticks.

Four people dressed in World War II-era German military uniforms and riding on a small jeep, waved black-white-and-red swastika flags and stuck their hands out in the Hitler salute. Some protesters carrying banners bearing slogans such as, "No to the Fourth Reich," the BBC reported.  

Other banners read "Merkel out, Greece is not your colony" and "This is not a European Union, it's slavery."

Reuters

Police try to disperse protesters reacting to the visit of Germany's Chancellor Angela Merkel in Athens on Oct. 9.

Some 6,000 police officers were deployed, including anti-terrorist units and rooftop snipers, to provide security during the six-hour visit. German sites in the Greek capital, including the embassy and the Goethe Institute, were under special protection. This security operation was one of Athens' biggest in a decade, the BBC reported.

Among the peaceful protesters, teacher Christina Vassilopoulou, 37, told AFP that despite having a doctorate, she only makes 900 euros (about $1,160) a month.

"We have children that go hungry and most of the parents are unemployed," she told the AFP news agency, the BBC said.

Constantine Spiliagopoulos, a lawyer who was also taking part in the protests said Merkel was "one of the main reasons that Greece's low income and the working classes of Greece are under attack," according to the BBC.

"That is why we must make our presence felt, we must shout against these polices and show that we will do everything so that they do not continue," she added.

Constantinos Siathas was more hopeful, telling The Associated Press: "I think most people, at least those who think and don't act based on feelings or utopian ideas, are pleased and are expecting a lot from Mrs. Merkel's visit."

Yiannis Bournos, a spokesperson for the leftist Syriza party, criticized Merkel's visit, telling the BBC that Greeks were "frustrated and enraged because they clearly understand that Mrs. Merkel's visit is just a theater play for the political support of a collapsing coalition."

Aid money "urgently needed"
After steering clear of Greece for the past five years, Merkel decided to visit now for several reasons.

She was keen to show support for Samaras, a fellow conservative, as he struggles to impose more cuts on a society fraying at the edges after five years of recession.

Yannis Behrakis / Reuters

Demonstrators, dressed as Nazis, wave a swastika flag as they ride in an open-top car in Syntagma Square in Athens to protest against the visit of Germany's Chancellor Angela Merkel, Oct. 9, 2012.

With a year to go until Germany holds a parliamentary election, Merkel also hoped to neutralize opposition criticism at home that she has neglected Greece and contributed to its woes by insisting on crushing budget cuts.

After her government flirted earlier this year with the idea of allowing Greece to exit the eurozone, she now appears determined to keep it in, at least until the German election is out of the way.

IMF: Global economic slowdown is getting worse, US must avoid 'fiscal cliff'

Greece is in talks with its "troika" of lenders - the European Union, European Central Bank and International Monetary Fund - on the next tranche of a 130 billion euro ($170 billion) loan package, its second bailout since 2010.

Without the 31.5 billion euro tranche, Greece says it will run out of money by the end of November.

The European commissioner for economic and monetary affairs, Olli Rehn, said Tuesday that Greece's creditors would not allow the country to go bankrupt, according to the German publication Spiegel. As European Union finance ministers met on Tuesday, Rehn said the next aid package would be granted "at the latest by November."

Merkel said the aid payment was "urgently needed" but stopped short of promising that the funds would flow.

"The troika report will come when it is ready. Being thorough is more important than being quick," Merkel said.

"We are working hard on this, but we must resolve all the problems," she added. "I think we'll see light at the end of the tunnel."

"This is an effort that should be seen through, because otherwise it would make the circumstances even more dramatic later on," she added, according to Spiegel.

Ties between Germany and Greece run deep. Thousands of Greeks came to Germany after World War II as "guest workers" to help rebuild the shattered country and more than 300,000 Greeks currently reside there.

But the relationship is clouded by atrocities Greeks suffered at the hands of the Nazis. Samaras' own great grandmother killed herself after she watched Nazi tanks rolling down the streets of Athens and the swastika flying over the Acropolis.

Greek President Karolos Papoulias, whom Merkel also met on Tuesday, fought against the Germans as a teenager, before fleeing to escape persecution by the Greek military dictatorship and finding refuge in Germany.

The crisis has revived long-dormant animosities, with Greek protesters burning effigies of Merkel in Nazi gear and German media playing up images of lazy Greeks keen for German cash.

Relations hit a post-war low early this year when Merkel's finance minister, Wolfgang Schaeuble, likened Athens to a "bottomless pit" and proposed imposing a European "Sparkommissar" on Greece to control its finances.

"The average German voter is irritated at the thought of dispatching more taxes or savings to feckless southerners, yet is desperate for the respect and goodwill to Germany that comes from public displays of magnanimity," said David Marsh, chairman of think tank OMFIF.

"When Merkel flies to Athens, she's showing she's in charge, and she cares."

Reuters contributed to this report.

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People walk past graffiti in central Athens on Monday ahead of the visit by German Chancellor Angela Merkel.

Debt-swamped Greece braced for two days of strikes, protests and potential violence as German Chancellor Angela Merkel, long demonized for her tough-talking, austerity-minded approach to Europe’s deepening woes, prepared to visit the epicenter of the crisis, three years since it began here.

To fend off potential attacks, at least 7,000 plainclothes police and hundreds more undercover agents have been mobilized from across the country to lock down the capital and erect steel fences around parliament. Snipers were already visibly stationed on the roof tops of government buildings in Athens; Commando Seals and Frogmen were also ordered on standby as helicopters began patrolling the Athenian skyline from Monday.

“It will be one of the biggest security drills in recent years,” said a senior police official speaking on condition of anonymity because of his knowledge of the security preparations.

Highly symbolic visit
In 1999, amid swelling opposition to NATO-led bombing raids in Kosovo, then-U.S. President Bill Clinton shortened a visit to Athens because of heightened security concerns mounted by a rash of rolling protests.

Deemed highly symbolic, Merkel’s seven-hour trip on Tuesday signals Berlin bid to keep Greece in the 17-nation euro and further mend strained relations with Prime Minister Antonis Samaras, the 61-year-old conservative leader, and one of the chancellor’s staunchest anti-austerity critics.

“We want to help Greece stabilize itself in the euro zone,” German government spokesman Steffen Seibert said in announcing the surprise visit, on Friday.

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Looming budget cuts have uncorked fresh social unrest, with the young, firebrand leader of Greece’s main opposition party, Syriza, calling on workers to flood the streets of Athens on Monday and Tuesday to show Merkel “the real Greece.” Other opposition parties are urging Greeks to gather at the German embassy and form a human shield around the building as Merkel meets with Samaras.

GSEE and ADEDY, the umbrella labor unions for private and public sector employees, have called for a three-hour job walk out across the greater Athens area Tuesday, bringing the country’s already anemic economy to fresh standstill as a rash of demonstration are set to grip the capital.

Swelling anti-German sentiment here has revived haunting memories of Greece’s Nazi occupation. While West Germany paid $22 billion in reparations to Greece in 1960, opposition parties have staked fresh demands for added outlays. At least 300,000 Greeks starved to death after the Nazi regime requisitioned food and other material.

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Thousands of people were slaughtered, the country's gold reserves were plundered by Hitler's forces and nearly 90 percent of the country's Jewish population was deported and exterminated.

The timing of the trip could not be more crucial: Samaras is struggling to reach agreement with his country’s international lenders on some $14 billion in added budget cuts. Failure to seal a deal could propel European leaders meeting on Oct. 18 to hold off on some $40 billion in bailout funds to Greece. That could push this tiny Mediterranean nation to bankruptcy within weeks, imperiling the fate of the European single currency.

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“The stakes are enormous,” George Pagoulatos, professor of European Politics and Economy at Athens University, told CNBC. “That Merkel, however, has agreed to come to Athens and afford political backing to Samaras demonstrates in most demonstrable way possible, her decision to tackle Europe’s debt troubles with Greece within the euro equation.”

“For markets, international lenders and European leaders heading into that summit next week, this is a powerful message and any decision to arise [from that summit] will most probably be within that context,” he said.

Debt-choked Greece looks to sell off islands, marinas and more

Austerity
Even so, pundits and politicians here say that support will fall well short of any design by Europe’s biggest economy and Greece’s most powerful lender to let up on Berlin’s curative approach to the continent’s deepening debt woes: austerity.

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Over the weekend, in fact, German Finance Minister Wolfgang Schaeuble warned that any disbursal of bailout funds to Greece hinged on Athens’ compliance with agreements to press ahead with added budget cuts -- a condition Samaras has already agreed to in securing a second $170 billion rescue loan from the European Union and the International Monetary Fund earlier this year.

Samaras, who fought his way to the helm of government after two divisive elections in May and June, has been trying to win over more time from creditors to ease the pain of a deeper-than-expected recession -- now in its fifth year.

Read this story on CNBC.com

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LONDON -- If there’s one sound nobody expects to hear at a Paralympic gold medal ceremony, it’s booing - let alone the sound of the 80,000-seat Olympic Stadium crowd jeering in unison. 

But that’s exactly what happened Monday evening when British Chancellor of the Exchequer George Osborne, who is in charge of steering the country’s economy out of its current doldrums, was introduced to present medals for the men’s (T38) 400-meter race.

Video clips of Osborne's embarrassed reaction quickly went viral.

His anticipated cuts to public welfare spending, which have angered many in the disabled community, may have been behind the huge boo.

'Meet the Superhumans': Paralympians burst onto world stage

Adam Hills, disabled comedian and host of Channel 4’s “The Last Leg” program, joked: “Who went, ‘Hmm, who's the best person to give out medals to disabled people? I know, the guy in charge of funding cuts for disabled people. That won’t go wrong!’”

Most unpopular
A recent poll shows Osborne to be the most unpopular member of the British government, with 56 percent of voters saying he’s doing a “bad job” and 48 percent saying he should lose his job altogether.

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Osborne seemed unfazed by his lack of popularity.

“If I was trying to win a popularity stakes, there are some easy things I could do. I could spend a lot more money –  that might make me popular in the short term,” he told the BBC’s The Andrew Marr Show on Sunday.  “It’s not the right decision... In a difficult environment, it’s not surprising that the Chancellor is not the most popular member of the government.”

Prime Ministers get booed too
Obsorne wasn’t the only one to feel the crowd’s disdain. Over at the aquatics center, his boss Prime Minister David Cameron was also met with jeers.

Some booing could be heard as he stepped up to present 17-year-old British swimmer Ellie Simmonds with her gold medal for the 200m individual medley.

In this case, though, wild cheers erupted in favor Ellie, drowning out much of the booing and keeping the focus firmly on the champion.

More coverage of the London Paralympics from Britain's ITV News

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Jon Nazca / Reuters

Marinaleda's Mayor and Izquierda Unida parliamentarian, Juan Manuel Sanchez Gordillo, 59, gestures as he speaks during a popular assembly in Marinaleda, southern Spain, Thursday.

A Spanish mayor who became a cult hero for staging supermarket robberies and giving stolen groceries to the poor on Thursday began a three-week march that looks set to embarrass the government and energize anti-austerity campaigners. 

Juan Manuel Sanchez Gordillo, regional lawmaker and mayor of the town of Marinaleda -- population 2,645 -- in the southern region of Andalusia, said food stolen last week in the robberies went to families hit hardest by Spain's economic crisis. 

About 1,000 marchers set out from the town of Jodar - the town with Andalusia's highest unemployment rate - intending to walk across the region in blistering summer heat to persuade other local leaders to refuse to comply with government reforms, deputy mayor Esperanze Saavedra told NBC News.

"We want the government to be sensitive to us and think more about those who are suffering than about the banks," Saavedra said.

He plans to tell mayors to skip debt payments, stop layoffs, cease home evictions and ignore central government demands for budget cuts, a message that infuriates Prime Minister Mariano Rajoy's government as it tries to convince investors in Spanish bonds that he can fix the battered economy. 

Sanchez Gordillo and those working with him say they wants to draw attention to the human face of Spain's economic mess - poverty levels have risen by over 15 percent since 2007, a quarter of workers are jobless and tens of thousands have been evicted from their homes. 

Spain's economic crisis turns middle-class families into illegal squatters

Media coverage of the supermarket stunt has made Sanchez Gordillo a national celebrity. While talking to Reuters he was approached by supporters who shook his hand and thanked him for his stand against the conservative government.

"There are people who don't have enough to eat. In the 21st century, this is an absolute disgrace," he told Reuters this week in an interview in the Atocha train station in Madrid, tugging on his graying Fidel Castro-style beard. 

Seven people have already been arrested for participating in the two supermarket raids, in which labor unionists, cheered on by supporters, piled food into supermarket carts and walked out without paying while Sanchez Gordillo, 59, stood outside. 

He has political immunity as an elected member of Andalusia's regional parliament, but says he would be happy to renounce it and be arrested himself. 

Economic troubles
Unemployment in Spain is the highest in at least 30 years, with almost one in four of the population out of work, with one worker in three in Andalusia being jobless. Over half of young people are out of work.

Meanwhile, Rajoy has sought a 100-billion-euro ($125 billion) bailout for the country's banking system. In mid-July, the government also unveiled a new round of cuts intended to trim 65 billion euros from the public deficit by 2014 and help Spain avoid seeking the kind of full-scale bailout that Greece, Ireland and Portugal have taken in the last two years.

Cristina Quicler / AFP - Getty Images

Juan Manuel Sanchez Gordillo (C), mayor of Marinaleda and member of the regional Andalusian parliament representing the United Left (IU) party, talks with activists on August 8.

The EU has demanded Spain shrink one of Europe's highest budget deficits to prevent the continent's debt crisis from spreading. Rajoy, in power since December, has ordered spending cuts and tax hikes. With poverty rising at one the fastest rates in Europe, protests have gained momentum.  

Sanchez Gordillo's activities have garnered praise from some who in Spain, but prompted a storm of criticism from other quarters. 

The conservative government says an official has no business flouting the law. 

"You can't be Robin Hood and the Sheriff of Nottingham," said Alfonso Alonso, spokesman for the ruling People's Party (PP) in the national Parliament. "This man is just searching for publicity at the cost of everyone else." 

Despite the small size of the town where he has been mayor for 30 years, Sanchez Gordillo has long been a fringe figure on the national stage, known for criticism of the mainstream political parties. 

He has introduced a cooperative farming system in Marinaleda and has repeatedly tried to take over land for farming, the latest target being 1,200 hectares of land owned by the Ministry of Defense. 

His message used to draw only a small following during Spain's boom years when many farm workers, especially in agricultural Andalusia, abandoned fields to work in the profitable construction sector. 

But now he has won far more attention as the collapse of a housing bubble forced thousands of unskilled workers back onto farms, while the government sank billions of euros of taxpayer funds into weak banks. 

"They say I'm dangerous. And the bankers who are let off for fraud? That's not dangerous? The banks which borrow from the ECB for 1 percent then resell that debt to Spaniards for 6 percent - they're not dangerous?" he said.

Reuters contributed to this report.

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© Luke Macgregor / Reuters / Reuters, file

A man looks at advertisements posted in the window of a recruitment agency in London on March 14, 2012. Britain's economy has shrunk for the last nine months and now produces 4.5 percent less than before the economic crisis.

LONDON -- A painful economic recession, rising unemployment and biting austerity measures may have already driven more than 1,000 people in Britain to commit suicide, according to a study published on Wednesday.

The study, a so-called time-trend analysis which compared the actual number of suicides with those expected if pre-recession trends had continued, reflects findings elsewhere in Europe where suicides are also on the rise.

"This a grim reminder after the euphoria of the Olympics of the challenges we face and those that lie ahead," said David Stuckler, a sociologist at Cambridge University who co-led the study, published in the British Medical Journal (BMJ).

UK slides back into recession in first double dip since 1970s

The analysis found that between 2008 and 2010 there were 846 more suicides among men in England than would have been expected if previous trends continued, and 155 more among women.

Between 2000 and 2010 each annual 10 percent increase in the number of unemployed people was associated with a 1.4 percent increase in the number of male suicides, the study found.

The analysis used data from the National Clinical and Health Outcomes Database and the Office of National Statistics.

In debt or jobless, many Italians choose suicide

Stuckler, who worked with researchers from Liverpool University and the London School of Hygiene and Tropical Medicine, stressed while this kind of statistical study could not establish a causal link, the power of the associations was strong. Its conclusions were strengthened by other indicators of rising mental health problems, stress and anxiety, he added.

He also pointed out the study showed a small reduction in the number of suicides in 2010 which coincided with a slight recovery in male employment.

A survey of 300 family doctors published by the Insight Research Group on Tuesday found that 76 percent of those questioned about the effects of the economic crisis said they thought it was making people unhealthier, leading to more anxiety, abortions and alcohol abuse.

After Olympics boost, Britons face austerity until 2020

Data this month from the government's Health and Social Care Information Centre showed the number of prescriptions dispensed in England for antidepressants rose 9.1 percent in 2010.

A study published last July, also by Stuckler, found that across Europe, suicide rates rose sharply from 2007 to 2009 as the financial crisis drove unemployment up and squeezed incomes.

The countries worst hit by severe economic downturns, such as Greece and Ireland, saw the most dramatic increases in suicides.

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In Britain, there's little doubt times have been getting harder. The economy has shrunk for the last nine months and now produces 4.5 percent less than before the economic crisis.

Government debt is well above a trillion pounds and is predicted to rise above 90 percent of GDP even with austerity policies being pushed through by the government.

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Many Britons have had the worst squeeze in living standards for 40 years and the crisis has hit young people hard, with youth unemployment soaring above 20 percent.

'Income, status, importance'
Stuckler's BMJ study found that the number of unemployed men rose on average across Britain by 25.6 percent each year from 2008 to 2010, a rise associated with a yearly increase in male suicides of 3.6 percent.

"Much of men's identity and sense of purpose is tied up with having a job. It brings income, status, importance..." Stuckler said in a telephone interview.

"And there's also a pattern in the U.K. where men are three times more likely to commit suicide than women, while women are much more likely to report being depressed and seek help."

Spain's economic crisis turns middle-class families into illegal squatters

The World Health Organisation estimates that every year, almost a million people die from suicide -- a rate of 16 per 100,000, or one every 40 seconds.

The U.N. health body also estimated that for every suicide, there are up to 20 attempted ones.

New figures released on Tuesday also showed that Europe is edging closer to recession, dragged down by the crippling debt problems of the 17 countries that use the euro.

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Eurostat, Europe's statistics agency, said that the economies of both the eurozone and the European Union, which has 27 countries, shrank by a quarterly rate of 0.2 percent in the second quarter of the year. In the first quarter, output for both regions was flat. 

"Austerity measures are sending us into poverty," said Armando Farias, executive committee member of the Confederation of Portuguese Workers. "We need development and investment, and we can't get them this way. We need to change path. Something needs to be done, and quickly."

Reuters and The Associated Press contributed to this report.

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Yorgos Karahalis / Reuters

Members of Greece's far right Golden Dawn party hand out boxes of milk to residents suffering from the economic crisis at the Syntagma square in Athens on Aug. 1, 2012.

Members of Greece's extreme right Golden Dawn party handed out food parcels outside Parliament on Wednesday, but made sure only Greek citizens received the assistance.

Hundreds stood in line at Athens' main Syntagma Square, showing identification proving their Greek citizenship to pick up their food. Party volunteers dressed in black passed out milk, pasta, potatoes and olive oil in a one-day charity event that critics said was meant to soften the image of a party likened to neo-Nazi groups.

Greece is going through its fifth year of recession, with poverty and the unemployment rate rising, and Golden Dawn has made inroads in the country's political system with its vehement attacks against traditionally dominant parties and strongly anti-immigrant stance.

TV show attack shows 'real face' of far-right in Greece?

Its members have been accused of involvement in attacks against immigrants,  and some of its senior officials have publicly declared admiration for Adolf Hitler. The party rejects the neo-Nazi label.

Public support, however, has increased 20-fold since elections in 2009, and Golden Dawn won 18 seats in the country's 300-seat parliament in June elections.

Surprise success dims for Greek far-right party

"Golden Dawn is a nationalist party and above all we are looking after Greeks," Golden Dawn Parliament member Nikolaos Michos told The Associated Press.

Panayotis Panagiotopoulos, an unemployed man waiting for food Wednesday, said he was grateful for the help and described Golden Dawn as representing "the soul of the Greek people."

Greek politician who attacked rivals on TV sues victims for defamation

The party denies any involvement in a recent surge of street attacks against Asian immigrants in Athens and other cities, despite repeated claims to the contrary by migrant groups and human rights activists.

"At night they beat people up. And by day, they hand out food," Petros Constantinou, a left-wing Athens city councilman, told the AP.

"They are exploiting people's misery to fish for votes. They are despicable."

Ilias Kasidiaris, one of Golden Dawn's MPs, told Reuters TV that the party had bought the food "exclusively from Greek producers to give to Greek people," the BBC reported.

Christos Pappas, a fellow MP, added: "We are in Greece, so Greeks have priority."

"The illegal immigrants that have come here, who enjoy, if you will, all the rights and privileges that come from Greek taxpayers are illegal, invaders. They are a threat to Greece," Pappas said, according to the BBC.

The Associated Press contributed to this report.

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Manu Fernandez / AP

Demonstrators protest against austerity measures announced by the Spanish government in Barcelona, Spain on July 19, 2012.

MADRID -- Hundreds of thousands of Spaniards marched on Thursday evening against the center-right government's latest austerity measures, passed after more than a week of demonstrations across the country.

Parliament on Thursday approved a package of 65 billion euros ($80 billion) of spending cuts and tax hikes as part of measures to avert a full European bail-out, bringing more hardship in a severe economic downturn in a nation where one in four are jobless.

Demonstrators took to the streets in towns and cities across Spain, thronging the thoroughfares of Madrid and Barcelona, waving flags and bearing banners decorated with scissors to symbolize spending cuts.

In Madrid, crowds of firefighters wearing helmets and t-shirts with the slogan "Firemen in danger of extinction" blew horns and let off firecrackers. Earlier, police officers and members of the Civil Guard joined the protests.

"We have lived through bad times, but this takes the biscuit," said 58-year-old fireman Francisco Vaquero.

Earlier Thursday, angry civil servants had blocked traffic in several main Madrid avenues, The Guardian newspaper of London reported. Protesters punctured tires on dozens of riot police vans.

The sight of demonstrators on Spain's streets is nothing new. Young "Indignados" (Indignants) protested in their thousands against unemployment last year. One in four Spaniards is without work.

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But since Prime Minister Mariano Rajoy announced spending cuts and tax rises last week there have been daily demonstrations drawing protests from public service workers like police that have previously stayed away.

Civil servants, whose pay was cut by up to 7 percent when their Christmas bonus was canceled, have used their coffee breaks this week to protest outside the ruling People's Party headquarters in Madrid.

This article includes reporting by Reuters and The Associated Press.

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Paul Hanna / Reuters

An injured protester shouts as she is detained by riot police during clashes between supporters of Spanish coal miners and riot police in Madrid on Wednesday.

MADRID -- Spain announced a 65 billion euro ($79.85 billion) austerity package that includes tax hikes and spending cuts on Wednesday, a day after it won approval from its euro partners for a huge bailout of the country's stricken banks.

Prime Minister Mariano Rajoy told parliament the country's future was at stake as Spain grapples with recession, a bloated deficit and investor wariness of its sovereign debt. He said the nearly $80 billion in savings will be achieved through 2015 by a hike in sales taxes and a series of spending cuts through 2015.

"We are living in a crucial moment which will determine our future and that of our families, that of our youth, of our welfare state," Rajoy said. 

"This is the reality. There is no other and we have to get out of this hole and we have to do it as soon as possible and there is no room for fantasies or off-the cuff improvisations because there is no choice," he added.

Spain's economic crisis turns middle-class families into illegal squatters

Spain's unemployment rate is more than 24 percent overall and 50 percent for young people. 

"What motivates us is the five million people out of work," the BBC News quoted Rajoy as saying.

Wednesday's increases in sales tax include a hike to 21 percent on products and services like clothing, cars, cigarettes and telephone services to 21 percent, and increase to 10 percent on goods such as public transport fares, processed foods and bar and hotel services. The sales tax on basic goods like bread, medicine and books stays at four percent.

The increases were widely expected but go against campaign pledges Rajoy made before he was elected in November and since he came to power.

PhotoBlog: Spanish miners converge on Madrid after long march over cuts

Other measures outlined Wednesday included:

• further cuts in government spending beyond the reductions already outlined in the 2012 budget
• wage cuts for civil servants and members of the national parliament
• further closures of state-owned companies
• tax deductions for homeowners to be scrapped
• a 30 percent cut in the number of town councilors
• changes to unemployment benefits designed to encourage jobless people to seek work quickly.
• 20 percent cut in government subsidies to political parties and labor unions.

Deadline to meet targets extended
On Tuesday, eurozone ministers agreed to grant Spain an extra year until 2014 to reach its deficit reduction targets in exchange for further budget savings and set the parameters of an aid package for Madrid's ailing banks.

The decisions were aimed at preventing the currency area's fourth largest economy, mired in a worsening recession, from needing a full state bailout which would stretch the limits of Europe's rescue fund and plunge it deeper into a debt crisis.

"The Eurogroup supports the recently adopted Commission recommendation to extend the deadline for the correction of the excessive deficit in Spain by one year to 2014," ministers said in a statement.

Emotions run high as eviction leads to protest in northern Spain

No final figure was agreed for aid to ailing Spanish lenders, weighed down by bad debts due to a housing crash and recession, but the EU has set a maximum of 100 billion euros ($123 billion) and some 30 billion euros would be available by the end of July if there was an urgent need.

A final loan agreement will be signed on or around July 20, Eurogroup chairman Jean-Claude Juncker told a news conference.

PhotoBlog: Faces of Spain's economic crisis

In one key decision closely watched by investors, ministers agreed that once a single European banking supervisor is set up next year, Spanish banks could be directly recapitalized from the euro zone rescue fund without requiring a state guarantee.

That fulfils an EU summit mandate to try to break a so-called "doom loop" of mutual dependency between weak banks and over indebted sovereigns, but represented a climb-down for hard-line north European creditor countries.

In a nine-hour marathon meeting ministers of the 17-nation eurozone also settled a series of long-delayed appointments.

As ministers were meeting, a top ECB policymaker warned that Europe's debt crisis was now more acute than the 2008 financial turmoil that felled U.S. investment bank Lehman Brothers.

"The eurozone crisis is now much more profound and more fundamental than at the time of Lehman," ECB Executive Board member Peter Praet told a conference in Lisbon.

The Eurogroup ministers were tasked with fleshing out a bare-bones agreement reached by EU leaders at a summit last month on establishing a European banking supervisor and using the bloc's rescue funds to stabilize bond markets.

But differences persisted between north European countries such as Finland and the Netherlands and southern states led by Italy and Spain.

Msnbc.com staff, Reuters and The Associated Press contributed to this report.

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