Austerity measures in Spain and Portugal have spurred belt-tightening in Italy, France and Britain, countries that so far have been largely spared from the effects of Greece’s crisis, analysts said.
“There really is no choice: Deficits are unsustainable in every country,” said Franco Bruni, monetary policy professor at Milan’s Bocconi University.
The “draconian” steps by Madrid and Lisbon “put pressure on Italy” even if its situation is not nearly as dire, said Marco Valli, chief economist for Italy at Unicredit.
Rome said last week that it would need to add 5 billion euros (US$6.3 billion) to the 20 billion euros it planned to trim from spending it plans next year to 2012 to lower the deficit to 2.7 percent in 2012.
Italian Prime Minister Silvio Berlusconi’s center-right government has managed to rein in Italy’s public deficit, which last year stood at 5.3 percent of GDP, compared with 9.4 percent in Portugal and 11.2 percent in Spain.
However, the government is planning to freeze public sector salaries for a year, while continuing to slash ministries’ budgets and stepping up its fight against tax evasion, press reports said.
Cabinet minister Roberto Calderoli of the populist Northern League party said on Friday he would propose salary cuts of “at least 5 percent” for Italy’s ministers and lawmakers.
Portugal on Thursday ordered deep wage and spending cuts along with higher taxes to slash the public deficit by more than half.
Portuguese Prime Minister Jose Socrates announced a hike of one basis point in value-added tax, higher profit taxes for big businesses and a 5 percent salary cut for elected officials.
A day earlier, Spanish Prime Minister Jose Luis Rodriguez Zapatero announced a raft of measures totaling 15 billion euros, including cutting civil service pay by 5 percent.
On Friday, the Madrid government said it was also considering tax hikes to help slash the public deficit.
The cuts are on top of a 50 billion euro austerity package announced in January that was designed to slash public deficit to the eurozone limit of 3 percent of GDP by 2013 from 11.2 percent last year.
After debt-laden Greece, Spain has been named along with Portugal as a potential new weak link in the eurozone.
In Britain, among the first steps taken by new Conservative Prime Minister David Cameron on Thursday was to order a 5 percent salary cut for Cabinet members.
For his part, French Prime Minister Francois Fillon last week announced a three-year freeze on public spending, but rejected opposition and union accusations that the government had adopted austerity measures.
French President Nicolas Sarkozy on Friday echoed Fillon’s assertion that the measure was aimed at reining in a soaring budget deficit.
In Italy, while a tax hike seems out of the question, the government said on Thursday it would withhold development funds from four regions running large healthcare deficits, telling them to raise local taxes.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS