economics

March 15, 2010

Greece Outlines More Steps to Pare Deficit Markets Hail New $6.5 Billion in Austerity Plans; Reaction at Home Is Resigned, but Civil Servants Pledge Resistance

Filed under: Uncategorized — ktetaichinh @ 10:13 pm
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[Greece]

—Ainsley Thompson and Mark Brown in London contributed to this article.

The latest austerity measures include an increase of two percentage points in the top value-added tax rate, stepped-up levies on tobacco, alcohol and fuel, a one-year freeze on civil servants’ pensions, and a 30% reduction in the two-month bonuses traditionally enjoyed by Greece’s public-sector workers.

London markets greeted Greece’s austerity plan, which is a combination of budget cuts and tax hikes, with some trepidation, Steve Goldstein tells the News Hub panel.

Public support for Prime Minister George Papandreou’s austerity policies is strong, despite recent strikes by organized labor, according to opinion polls taken before Wednesday’s announcement.

A survey published in newspaper Ta Nea over the weekend, when the measures were already widely expected, showed 52% of people view the government’s handling of the economic crisis as “effective.”

Zuma PressPensioners assail the latest austerity measures Wednesday by rioting outside the premier’s office in Athens.

GREECE

GREECE

Many Athenians’ support is grudging, however, combining fear of financial pain with anger at a political class that many here say has misruled Greece for years.

“If I have to tighten my belt even further, I at least want to see some of those people who stole state money to end up in jail,” said Andreas Papavasiliou, a 68-year-old retiree.

Many civil servants, the group that would be hardest hit by the planned cuts, vowed to resist the new package.

“The new measures will be the fatal blow for the average income earner. We will fight back with all means. Those who have money must pay, but those who don’t must be supported. But those measures only hurt the poor,” said Spyros Papaspyros, president of the public-sector union federation ADEDY, which had already called for a 24-hour general strike on March 16.

EU Commission President José Manuel Barroso praised the Greek measures, saying Greece’s budget consolidation was “now on track.”

Europe’s Debt Crisis

Take a look at events that have rattled European governments and global markets.

Growing Apart

Take a look at the premium in percentage points that selected euro-zone governments must pay on their 10-year bonds.

Germany, Europe’s biggest economy and the key to any financial assistance for Greece, called Greece’s package a “clear signal” that Greece was determined to bring its finances under control—but it also said no bailout was in the works, or immediately necessary.

Many Greeks have mixed feelings about Europe’s reluctance to help the country out. “The Germans are not our parents. We will have to deal with this ourselves,” said Andreas Christou, a 37-year-old civil servant. But Germany’s parsimony so far “proves that there is no such thing as EU solidarity,” he said.

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