Spain Passes Public Wage Cuts, Lowers Growth Outlook

Spain approved the first public wage cuts since returning to democracy in 1978 and reduced its economic growth forecast for next year as the government tries to tame the euro region’s third-largest budget deficit.

Gross domestic product will grow 1.3 percent in 2011, less than a previous projection for 1.8 percent, and the government said the deficit will narrow to 6 percent of GDP next year from 11.2 percent in 2009. Wages for government workers will drop 5 percent in June.