Spanish Riot Police
Spanish Riot Police Reuters

Spain's sovereign debt crisis turned bloody on Wednesday as police in central Madrid fired rubber bullets after thousands rose up against new spending cuts by the government.

Pictures from the scene showed bloodied protesters who had been struck in the head and upper torso with rubber bullets and truncheons.

Rubber bullets, which contain a metal core inside the rubber, can be still cause death or grevious injury if they strike the head or soft-tissue covering unprotected organs.

Protesters were livid over a 63 per cent cut in subsidies to coal mining companies, who are major contributors to the Spanish energy market.

Unions say the plan threatens the livelihoods of some 30,000 coal industry workers.

Miners have been joined by other citizens who arrived to protest Prime Minister Mariano Rajoy’s decision to raise VAT by 3 per cent.

Raising the Spanish import tax is a part of Rajoy's plan to trim the public budget by 65 billion euro over the next two-and-a-half years.

The PM also announced a 3.5-billion-euro cut to local government spending.