The cities of Europe are braced for protests, gridlock and mayhem today as hundreds of thousands of people take to the streets across the continent to demonstrate against assaults on national budgets, public services, and jobs.

In a test of the residual power of trade unions in an era of casino capitalism and cash-strapped government, workers and union members are expected to stage protests in at least a dozen cities across the EU, climaxing this afternoon in a mass rally in Brussels near the EU's headquarters.

About 100,000 people from more than two dozen countries are expected to take part in the biggest protest seen in Brussels in a decade.

Two days before the Spanish government unveils a budget that will slash public spending, unions in Spain are mobilised for the country's first general strike in eight years. Further large protests are predicted in Poland, Portugal, Greece, Ireland, Romania and Serbia.

"This is a crucial day for Europe," said John Monks, general secretary of the European Trades Union Confederation which has organised the Brussels protest. "Our governments, virtually all of them, are about to embark on solid cuts in public expenditures. They're doing this at a time where the economy is very close to recession, and almost certainly you'll see the economy go back into recession as the effect of these cuts take place."

The financial crash two years ago and the hundreds of billions spent to bail out the banks and shore up international capitalism rebounded with a vengeance this year on public purses across Europe, generating a sovereign debt crises in Greece and fears for collapse in Ireland, Spain and Portugal.

The remedy, in Britain and across a Europe that is emerging sluggishly from the worst recession since the 1930s, is generally to take an axe to public spending.

Later today, the European commission is to unveil its latest proposals to rein in public spending across the EU and impose sanctions, fines and political penalties for countries that fail to keep their budget deficits and national debt levels below agreed ceilings, leading to further austerity measures.

"These thousands demonstrating on the street of Brussels today are the hardworking ordinary citizens of Europe who have had to carry too heavy a burden in the aftermath of the economic crisis," said Poul Nyrup Rasmussen, head of the European Socialists party which groups social democratic parties across the EU. "European leaders, using European solutions, must define a new balanced way to recovery that illustrates that the lessons of the crisis have been learned and the burden shared."

But with bankers' bonuses booming again and public spending being savaged, many feel there is little sign of balanced burden-sharing.

"No one should underestimate the sense of injustice that Europe's citizens feel today," José Manuel Barroso, the European commission president, told financiers yesterday.

EU governments are edging towards an agreement on a banking levy which will generate modest amounts of cash used mainly to improve national budgets. There is also talk of a more ambitious "transactions tax" on the financial markets, a "Robin Hood" tax which would be popular with the unions and the left.

"The financial sector has benefited from a lot of solidarity, and it is time to return the favour by showing great responsibility," Barroso said. "That means making a fair contribution to cover the costs the sector has incurred for the taxpayer."

But there is great scepticism among policy-makers about the chances of making a Robin Hood tax work, or of getting a global agreement.

The transaction tax is being discussed by European governments, but with little enthusiasm, an EU finance minister told the Guardian.

"Is it true it's impossible today? Yes," he said. "It's very difficult to organise. But we're discussing it because of the political pressure. You read about it all the time in the papers, the banks must pay."

Barring periodic protest in Greece at the government's radical overhaul of budgets and public services and opposition on the streets in France to pensions and retirement age reforms, the public response to austerity packages has been generally muted.

Hungary and Latvia were struck by the economic and financial crisis two years ago and embarked on huge cuts in public spending and services with only minor outbreaks of unrest.

Opinion polls in Spain indicate a small minority of union members will take part in today's general strike.

Union membership across Europe has declined sharply in recent years and is now largely confined to the state sector.

Europe's day of protest is intended as a show of union power staging a comeback, but may prove a noisy damp squib, a demonstration of angry impotence.