FACTBOX-Austerity measures around the eurozone

May 27 (BestGrowthStock) – Spain’s parliament on Thursday passed by
just one vote government plans to shave 15 billion euros off the
fiscal deficit with measures including salary cuts for public
workers and pension freezes.

Here are some details on austerity measures around the


— Prime Minister Jose Luis Rodriguez Zapatero announced on
May 12 fresh spending cuts totalling 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

— Public debt as a percentage of GDP is seen at 65.9
percent in 2010, rising to 71.9 percent in 2011.


— On May 25 a cabinet meeting approved a 24 billion-euro
deficit cut and measures such as delaying retirement dates by
between three and six months, a state salary freeze and cuts to
the pay of high public sector earners.

— Regional and local governments will be pressed to
contribute some 13 billion euros of spending cuts in 2011-2012,
sources said, almost inevitably affecting schools and hospitals.
Busy arteries such as Rome’s ring road may become toll roads.

— Though Italy kept its budget deficit down to 5.3 percent
of GDP last year — well below the EU average — the budget aims
to slash it to 2.7 percent by 2012.


— 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 in VAT sales tax, income tax and
profits tax ranging from 1 percent to 2.5 percent.

— The cabinet approved the programme on May 20. 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.


— 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, except pensions and
interest payments on government debt, 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 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 GDP 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 month 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.


— The main VAT rate is increased by 2 percentage points to
23 percent. In March it had grown to 21 percent from 19 percent.

— 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 licences and more property taxes.


— 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.



— 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.


— Fiscal reform so far: 3 austerity budgets presented in
little over a year, in Oct. 2008, April 2009 and Dec. 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.

Penny Stocks
(Writing by David Cutler, London Editorial Reference Unit;
Editing by Michael Taylor)

FACTBOX-Austerity measures around the eurozone