Austerity measures in the eurozone

Here are some of the austerity measures implemented by governments in the euro zone:

Italy:

• Prime Minister Silvio Berlusconi's government won a confidence vote on Thursday on the unpopular €25bn austerity package it says will shore up Italy's strained public finances.

• Although Italy kept its budget deficit down to 5.3% of GDP in 2009, well below the EU average, the budget aims to cut the deficit to 2.7% by 2012.

Here are some of the measures:

• 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 €13bn of spending cuts in 2011-2012.

• There will be a 10% cut per year in 2011 and 2012 in spending by all government ministries. Provincial governments with less than 220 000 inhabitants will be abolished.

• Abolition of publicly funded think-tanks, including ISAE, which conducts Italy's consumer and business confidence surveys.

Greece:

• Greek lawmakers 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.

• It plans to narrow its budget shortfall from 13.6% of GDP in 2009 to 8.1% this year, 7.6% in 2011 and 2.6% in 2014.

Austerity measures include:

• Public sector pay freeze until 2014.

• Christmas, Easter and summer holiday bonuses, also known as 13th and 14th month salaries, are abolished for civil servants earning above €3 000 a month.

• Public sector allowances cut by an additional 8%. These allowances had already been cut by 12%.

• Freeze pensions in 2010, 2011 and 2012. The retirement age for women will be lifted by 5 years to 65 to match men and the number of contribution years will rise from 35-37 to 40.

• The main VAT rate was increased by 2 percentage points to 23%. Excise taxes on fuel, cigarettes and alcohol are increased by a further 10%.

Spain:

• Spain's parliament has ratified labour reforms aimed at reviving the eurozone's No.4 economy. The process of debating and amending a bill on the reforms could take a year.

• The government in May announced fresh spending cuts totalling €15bn in 2010 and 2011. Spain's deficit targets are 9.3% of GDP in 2010 and 6% in 2011, compared to 11.2% in 2009.

Here are details of cuts and measures:

• Civil service salaries will be cut by 5% in 2010 and frozen in 2011. More than €6bn to be cut from public investment.

• Suspension of yearly pension increases in 2011

• Elimination of €2 500 birth payment from 2011.

• 70 road projects put on hold for 2011.

• VAT increased to 18% from 16% from July 1.

France:

• President Nicolas Sarkozy hopes reforms will convince investors he is serious about cleaning up state finances, which are set to register record deficit and debt levels in 2010.

• Budget Minister Francois Baroin wants to cut the deficit by €40bn by the end of 2011, €11bn of which would come from a rebound in tax revenues, €15bn from ending stimulus measures and €14bn from spending cuts.

Here are details of cuts and measures:

• Plans to raise the retirement age to 62 from 60 by 2018, make people work longer for a full pension and raise public sector contributions to private sector levels.

• Top rate of income tax will be raised to 41% from 40% to help fund the pension regime.

• Taxes on capital gains and investment income will also rise by a point.

• All spending frozen, except pensions and interest payments on government debt, between 2011-2013 and state operating costs cut by 10% over that period.

• Around 1 700 public buildings will be sold off. Office space will be cut by more than 500 000 m2 in three years.

• State intervention spending such as subsidies and social support will be cut by 10%.

• France will make savings on its defence budget of €3.5bn in 2011-2013, a source close to the issue said.

Portugal:

• Portugal's parliament approved the government's austerity package in June to speed up a reduction in the budget deficit to 7.3% of GDP in 2010 and 4.6% in 2011, from 9.4% in 2009. Portugal aims to save €2bn in 2010.

• Portugal ruled out drawing on the eurozone aid package, citing a successful bond sale and economic recovery in Q1.

• Prime Minister Jose Socrates and opposition leader Pedro Passos Coelho drew up steps in June to slash the budget deficit.

Measures include:

• 5% pay cuts for senior public sector staff and politicians.

• Increases in VAT sales tax, income tax and profits tax up to 2.5%.

Germany:

• Chancellor Angela Merkel said her government aims to save around €80bn between 2011 and 2014 and get the German budget deficit below European Union limits by 2013.

• The cabinet agreed a package in June which will cut welfare spending by €30bn over the period, reduce public sector payrolls by up to 15 000 by 2014 and raise new taxes on nuclear power plant operators and air travel.

• The government also hopes to realise some €5.5bn through subsidy cuts and raise €2bn per year with a financial transaction tax.

• Defence ministry experts have drawn up a list of potential savings in weapons and equipment worth more than €9.3bn.

Ireland:

• Ireland has carried out some of the harshest austerity measures in the eurozone. Ireland's public sector unions passed a pay deal in June, boosting government chances of pushing through further savings in the budget for 2011. The budget for 2010 presented in December projected a deficit of 11.6% of gross domestic product.

Measures include:

• Cutting public service salaries by 5% - 15% in a 2010 budget that inflicted €4bn of cuts. The government has promised no further public sector pay cuts until 2014

• Three austerity budgets presented, in October 2008, April 2009 and December 2010, with the first two focused on tax rises. December's budget for 2010 delivered spending cuts of €4bn, including a cut in public sector pay.
  

  - Reuters