The government has not made any major commitments on spending cuts. Small savings will be found by not replacing all retiring civil servants, but its main problem is an enormous public pensions bill. Nicolas Sarkozy is keen to push through a major reform that would raise the retirement age, currently 60. The final salary pensions for civil servants are very generous, with the average French worker spending 24 years in retirement, well above average for a developed nation. Sarkozy has pledged to cut France's deficit to 3 per cent of GDP by 2013.
Soaring unemployment has reinforced Spain's mounting debt crisis. This month, Prime Minister Jose Luis Rodriguez Zapatero backed a major austerity programme which will save €15bn over two years. The plan included a 5 per cent cut to public sector pay, the freezing of pension contributions, cuts to regional government and the scrapping of some welfare programmes.
Draconian austerity measures have been introduced, after Greece was forced to turn to its eurozone partners for a €110bn bailout. The cuts now amount to €30bn from public spending over three years. Measures include major changes to pension contributions, scrapping bonuses for public sector workers and retired workers, and raising sales tax.
Germany will begin a spending squeeze from next year and is expected to cut at least €10bn a year until 2016. The tough measures are designed to set an example to the rest of Europe, as well as help Germany comply with rules on dealing with debt written into its constitution. Subsidies are expected to be targeted, and there will be tax rises and departmental spending cuts.
A "crisis tax" on pay packets and large firms is to form part of the plan designed to slash Portugal's budget deficit by more than half in less than two years. It was seen as the country most vulnerable to market instability after Greece. Portugal aims to cut its deficit by €11bn over four years.Reuse content