MADRID, May 12 (UPI) -- Spanish Prime Minister Jose Luis Rodriguez Zapatero's spending cut proposal was met with a counter-intuitive rise in stock markets Wednesday.
The Indice General de Bolsa de Madrid rose 0.45 percent, while the IBEX 35 -- the Iberian Index -- rose 0.41 percent after Zapatero proposed lowering pay for government workers by 5 percent and freezing their wages next year.
Stock markets would normally be expected to turn lower when a leading government official admits that the government is cutting back. Investors, instead, embraced the proposal that is meant to get control of the government's debt.
Elected officials are expected to take a 15 percent pay cut to model the austerity measures that are expected to reduce the government's debt to 6 percent of Spain's gross domestic product in 2011, down from 11.2 percent in 2009, The New York Times reported.
Leader of the Popular Party Mariano Rajoy snipped at what he considered an overdue reaction to Spain's debt burden. The $957 billion in loans made available by the European Union and the International Monetary Fund over the weekend had gotten Zapatero "to see the light," Rajoy said.