SPAIN'S trade unions plan to challenge in court the government's plans to cut public servants pay, Candido Mendez, the leader of Spain's second largest union, the UGT, said yesterday. The government announced last week it would cut public servants' pay by 5 percent this year as part of an austerity plan totaling 15 billion euros and the cuts, in particular the overnight manner in which they were announced has angered the public sector which is planning strike action for June 8 and is calling on the private sector to join forces as part of a general strike.

Faced with widespread defiance from the general public, the prime Minister has already back tracked on some of the austerity measures, in particular freezing pensions but he is sticking to plans to increase VAT by as much as two percnt in July.