FACTBOX-Austerity measures around the euro zone

Published 11/05/2010, 08:55 AM
Updated 11/05/2010, 09:00 AM

Nov 5 (Reuters) - Here are details of some austerity measures around the euro zone:

* IRELAND:

-- The Irish government side-stepped questions on Friday about when it will unveil a four-year austerity plan. -- It said on Thursday it would push through spending cuts and tax hikes totalling 6 billion euros in 2011 to get its budget deficit under control by a deadline of 2014.

-- Finance Minister Brian Lenihan said he expected next year's adjustment, which will be weighed more on the spending side, would cut the deficit to 9.25-9.5 percent of GDP in 2011 and to 2.75-3 percent of GDP in 2014, the deadline he has agreed with Brussels to get the shortfall under control.

-- The budget deficit is set to blow out to 32 percent of GDP in 2010 due to the one-off inclusion of a mammoth bill for bailing out Ireland's banks. Excluding the bank bill, the deficit will be nearly 12 percent of GDP this year. -- Fitch cut Ireland's credit rating last month and consumer morale slumped as the cost of cleaning up its banks hit home, piling pressure on the government to bring forward the 2011 budget, the toughest on record, due on Dec 7.

* PORTUGAL:

-- Portugal's parliament on Nov. 3 approved the general guidelines of the budget bill, clearing another hurdle for a fiscal programme that aims to sharply cut the deficit.

-- 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.

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.

* GREECE:

-- Greek Prime Minister George Papandreou said this month he was not bluffing about the possibility of calling snap elections and needed support for policies meant to bring Greece's deficit to under 3 percent of GDP by 2014 from over 15 percent in 2009.

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

-- 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 [ID:nLDE65N0KS]

-- Public sector wages were cut by an average 15 percent in 2010 and will be frozen 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.

* 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.

-- Income tax rate on those earning more than 120,000 euros rises up to 22.5 pct from 21.5 pct. Government hopes to raise 170-200 mln euros from tax hike on high earners.

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

* FRANCE:

-- The budget aims 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.

-- France finally passed its planned rise in the retirement age to 62 from 60 by 2018, making people work longer for a full pension and raised public sector contributions to private sector levels. The reform will also raise the age to receive a full pension to 67 from 65.

-- 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.

* 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.

* 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, due before parliament by end of November, will cut spending to 307.4 billion euros in 2011, a 3.8 percent decrease from 2010, and reduce the deficit to 60 billion. (Writing by David Cutler, London Editorial Reference Unit)

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