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FACTBOX-Austerity measures around the euro zone

Published 10/22/2010, 04:48 PM
Updated 10/22/2010, 04:52 PM

Oct 22 (Reuters) - The French Senate approved an unpopular pension reform on Friday in a victory for President Nicolas Sarkozy, although unions opposed to raising the retirement age have vowed to keep fighting it.

The broader measures Sarkozy is pushing through to cut the deficit are far milder than in countries such as Britain, which unveiled 80 billion pounds ($126 billion) in spending cuts this week.

Here are details of some austerity measures around the euro zone:

* FRANCE:

-- Plans to raise the minimum retirement age to 62 from 60 by 2018, make people work longer for a full pension and raise public sector contributions to private sector levels. Prime Minister Francois Fillon has ruled out any retreat on his government's plans. France's six main unions have called two more days of action on Oct. 28 and Nov. 6 against the unpopular reform.

-- The government is aiming to cut the public deficit to 6 percent of gross domestic product in 2011 from 7.7 percent in 2010, in the first phase of a plan to trim the shortfall to the EU's 3 percent ceiling in 2013, and 2 percent in 2014.

-- Raising the top marginal rate of tax to 41 percent from 40 percent to fund pension reforms.

-- Raising the tax on capital gains by one percentage point.

-- The end of a one-off corporate tax break in 2010 will increase revenues by 5.3 billion euros.

-- The government aims to raise some 400 million euros from the sale of property in 2011.

-- The end of fiscal stimulus measures will cut 8.2 billion euros from the deficit.

* PORTUGAL:

-- Portugal has promised to cut this year's budget deficit to 7.3 percent of gross domestic product from 9.3 percent last year and further reduce it to 4.6 percent in 2011. However the main opposition party set lower tax hikes and more spending cuts as conditions to pass the bill.

Here are some of the measures:

-- Cuts of 5 percent in civil servant wages and increases in taxes in an effort to save 5.1 billion euros ($6.93 billion) next year.

-- On the revenue side, the measures would add 1.7 billion euros to state coffers, or one percentage point of gross domestic product. They include:

-- Value-added tax to be raised by 2 percentage points for top level to 23 percent from 21 percent, expands on a 1 percentage point increase on all levels implemented in July.

-- New tax on financial system in line with EU initiatives.

-- Revision of fiscal benefits for companies.

* GREECE:

-- Greece unveiled another austerity budget on Oct. 4. The budget targets a deficit of 7.0 percent of gdp in 2011, from a project 7.8 percent in 2010 and below an initial 8.1 percent target under a baseline IMF/EU scenario.

-- Greece's belt-tightening will continue with next year's budget relying on property taxes, an amnesty on building violations, new gambling licences and a one-off tax on profitable businesses for the third year in a row.

-- Greek lawmakers have already approved a pension reform bill which raises the retirement age and curbs early pensions, a key element of an EU/IMF bailout aimed at pulling the country out of a debt crisis. For more details, click on

-- Public sector wages were cut by an average 15 percent in 2010 and will freeze until 2014. Private sector wages were frozen for this year and will rise in line with euro area inflation in 2011 and 2012.

-- The main VAT rate was increased by 4 percentage points to 23 percent. Monday's budget foresees 1 billion euro revenues from VAT but does not make clear which products and services now under 11 percent will move to a higher bracket.

* SPAIN:

-- Spain revealed full details of its 2011 budget on Oct. 7 before parliament, including its estimates for bond issuance in 2011. Announced measures include:

-- Public spending, excluding autonomous regions, to be cut by 7.9 percent to 122 billion euros ($165.7 billion) in 2011.

-- Ministry spending to be cut on average 16 percent

-- Income tax rate on those earning more than 120,000 euros rises up to 22.5 percent from 21.5 percent.

-- Rate on those earnings more than 175,000 euros to rise to 23.5 percent

-- Government hopes to raise 170-200 million euros from tax hike on high earners.

-- Forecasts additional 1.2 billion euros savings from regional and local governments.

* ITALY:

-- Although Italy kept its budget deficit down to 5.3 percent of GDP in 2009, well below the EU average, the budget aims to cut the deficit to 2.7 percent by 2012.

-- Delaying retirement dates by three to six months, a state salary freeze and pay cuts for high public sector earners.

-- Regional and local governments will be pressed to contribute some 13 billion euros of spending cuts in 2011-2012.

-- There will be a 10 percent cut per year in 2011 and 2012 in spending by all government ministries. Provincial governments with less than 220,000 inhabitants will be abolished.

* GERMANY:

-- Chancellor Angela Merkel said her government aims to save around 80 billion euros between 2011 and 2014 and get the German budget deficit below European Union limits by 2013. The cabinet backed a bill covering the bulk of the 80 billion euro ($101 programme over the next four years on Sept 1.

-- The budget, before parliament by end of November, will cut spending to 307.4 billion euros next year, a 3.8 percent decrease from 2010, and reduce the deficit to 60 billion.

-- The cabinet agreed a package in June which will cut welfare spending by 30 billion euros over the period, reduce public sector payrolls by up to 15,000 by 2014 and raise new taxes on nuclear power plant operators and air travel.

-- Hopes to realise 5.5 billion euros through subsidy cuts and raise 2 billion a year with a financial transaction tax.

-- Defence ministry experts have drawn up a list of potential savings worth more than 9.3 billion euros.

* IRELAND:

-- Ireland has yet to make a decision on the level of budget cuts it will make next year, the Department of Finance said on Friday, denying a newspaper report a figure of 4.5 billion euros had been agreed.

-- Ireland needs to get the worst fiscal shortfall in Europe back within a limit of 3 percent of GDP by 2014 and will detail how it plans to get there by unveiling a four-year budget plan next month.

-- Ireland has carried out some of the harshest austerity measures in the euro zone. Its public sector unions passed a pay deal in June, ending low-key protests but limiting Dublin's options in making at least 3 billion euros of savings apiece in the next two budgets.

-- One measure in last December's budget was cutting public service salaries by 5-15 percent. The budget inflicted 4 billion euros of cuts. The government has promised no further public sector pay cuts until 2014.

-- Ireland said in July that it would cut its budget for infrastructure projects in 2011 to 5.5 billion euros, generating 1 billion euros of savings, or one-third of the total amount required in December's budget. (Writing by David Cutler, London Editorial Reference Unit; editing by David Stamp)

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