The Spanish pledge to extra fiscal austerity —apparently following a call from President Obama— has calmed markets. Measures include:
- Cut deficit by extra 0.5% GDP in 2010 + extra 1% 2011 = total €15bn
- Cut civil service salaries by 5% in June, then freeze in 2011
- Ministers will take a 15% pay cut
- € 6bn cut in public sector investment
- €1.2bn cuts in local & regional governments
- Freeze on pension payments
- Abolition in 2011 of € 2,500 childbirth allowance
- € 600m reduction in foreign aid
For comparison, this is a breakdown of the Greek proposal:
- Two to three percentage points increase in value-added tax
- Three-year public sector pay freeze; recruitment frozen
- Abolition of ‘13th and 14th monthly salary’ for public sector workers; 5 per cent cut in allowances
- No renewals for short-term public sector contracts
- Closure of more than 800 out-dated state entities
- Opening up of more than 60 ‘closed-shop’ professions
- Overhaul of pension system: raising average retirement age to 67 for men and women; cutting state corporation pensions.
- Privatisation: sales of state corporations; flotations on Athens stock exchange; sales and leasing of state-owned properties
- As a result of measures, the average retirement age would be raised from 53 at present to 67
