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Spain's Mariano Rajoy announces new austerity measures

11 July 2012 Last updated at 10:18 BST

Spanish Prime Minister Mariano Rajoy has announced a 3% rise in VAT as part of a raft of austerity measures aimed at balancing the budget.

His speech comes as hundreds of Spanish miners arrived in Madrid to protest against government cuts to subsidies.

Mr Rajoy said sales tax would go up to 21% and there would be a 3.5bn euro cut in local authority budgets.

The measures are in return for a eurozone bank bailout and an extension to Spain's deficit reduction targets.

Brian Milligan reports.