Factbox: Austerity measures around eurozone

(BestGrowthStock) – Portuguese leaders agreed new austerity measures on Thursday, joining a coordinated euro zone push that has so far calmed the markets’ worst fears of a Greek-style debt crisis spreading.

Here are some details on austerity measures around the eurozone:

* PORTUGAL:

— Prime Minister Jose Socrates and opposition leader Pedro Passos Coelho drew up steps to slash the budget deficit, including 5 percent pay cuts for senior public sector staff and politicians, and increases of VAT sales tax, income tax and profits tax ranging from one to 2.5 percent.

— The cabinet approved the programme. The government said it would cut the deficit to 7.3 percent of GDP in 2010 and 4.6 percent in 2011. In 2009 it hit 9.4 percent, prompting a sell-off of Portuguese assets by investors.

* FRANCE:

— French President Nicolas Sarkozy has said France will look to restore its public finances as the economic recovery takes root.

— In an effort to keep a lid on the budget deficit, France has said it will freeze all spending, bar pensions and interest payments, between 2011-2013 and cut state operating costs by 10 percent over the same period. Sarkozy has said this does not amount to an austerity plan.

* GREECE:

— Greece has approved a pension reform bill, after agreeing with the European Union and the International Monetary Fund a fresh set of austerity measures aimed at pulling the country out of a severe debt crisis that has shaken the euro zone.

— Under the EU-IMF deal, Greece plans to narrow its budget shortfall from 13.6 percent of gross domestic product in 2009 to 8.1 percent this year, 7.6 percent in 2011 and 2.6 percent in 2014.

— Austerity measures include a public sector pay freeze until 2014. Christmas, Easter and summer holiday bonuses, also known as 13th and 14th salaries, are abolished for civil servants earning above 3,000 euros a month and are capped at 1,000 euros for those earning less.

— Public sector allowances are cut by an additional 8 percent. These allowances, which account for a significant part of civil servants’ overall income, were cut by 12 percent under a round of austerity measures announced in March.

* TAX HIKES:

— The main VAT rate is increased by 2 percentage points to 23 percent. It had been raised to 21 percent from 19 percent in March.

— Excise taxes on fuel, cigarettes and alcohol are increased by a further 10 percent.

— The government expects to generate additional revenues through a one-off tax on highly profitable companies, as well as new gambling and gaming licenses and more property taxes.

* PENSIONS:

— The government has said it will freeze pensions in 2010, 2011 and 2012.

— According to the pension bill, expected to be voted by parliament in June, the statutory retirement age for women will be raised by 5 years to 65 to match the retirement age for men.

* IRELAND:

* DEFICIT:

— The government’s budget for 2010 presented in December projected a deficit of 11.6 percent of gross domestic product. The median forecast of analysts polled by Reuters is for Ireland’s budget deficit to come in at 11.5 percent.

* AUSTERITY:

— Fiscal reform so far: 3 austerity budgets presented in little over a year, in October 2008, April 2009 and December 2010. With the first two budgets focused on tax rises, December’s budget for 2010 drew most praise as it delivered spending cuts of 4 billion euros, including a cut in public sector pay.

— Fresh savings worth 3 billion euros are planned for each of 2011 and 2012.

* SPAIN:

— Spain’s Prime Minister Jose Luis Rodriguez Zapatero announced on Wednesday fresh spending cuts totaling 15 billion euros in 2010 and 2011. Civil service salaries will be cut by 5 percent in 2010 and frozen in 2011, while more than 6 billion euros will be cut from public investment.

— The cuts are aimed at speeding up fiscal consolidation and meet Spain’s revised deficit targets of 9.3 percent of GDP in 2010 and 6 percent in 2011, compared with 11.2 percent in 2009.

— Public debt as a percentage of GDP is seen at 65.9 percent in 2010, rising to 7.19 percent in 2011.

Money

Source: Reuters Bureaux

Factbox: Austerity measures around eurozone