Thousands of Spaniards have assembled near parliament in the capital Madrid to protest against government austerity cuts they say are punishing the poor.

Surrounded by fleets of riot police vans, the crowd gathered in front of police barriers blocking the road to the lower house of Congress where legislators were debating the 2013 budget on Tuesday.

Clashes with police have broken out on the fringes of several mass protests in Spain over recent months, but no incidents were reported on Tuesday evening.

The new budget includes $50bn worth of crisis savings measures.

Demonstrators called for the resignation of members of the two main political parties, the ruling conservative Popular Party and the opposition Socialists.

Protesters' anger has been fanned by the offering of a loan of up to $129bn by Spain's eurozone partners to rescue the country's stricken banks, which Spaniards blame for the crisis.

The economic crisis, blamed on the collapse of a speculation-driven real estate boom, has plunged Spain into recession, throwing millions out of work and many families into poverty. Unemployment is close to 25 per cent.

The Bank of Spain said on Tuesday that the recession continued in the third quarter of 2012 when output shrank by an estimated 0.4 per cent.

Cristobal Montoro, the treasury minister, told parliament that the budget would help make 2013 "the last year of recession".

But he drew the scorn of protesters by saying that the budget was "the most socially-oriented budget in the history of Spanish democracy".

More protests outside parliament are planned for Thursday and Saturday. 

Source: Agencies