EUROZONE PROBLEM COUNTRIES

Ireland

• Deficit in 2010 11.7%
• Target date for reaching below EU’s 3% threshold – 2014
• Plans Cuts in public sector pay of up to 20% and reductions in child and unemployment benefit

Portugal

• Deficit in 2010 8.3%
• Target date for <3% threshold – 2013
• Plans – Public sector wage freeze, increase in capital gains tax, 50% tax on bankers’ bonuses

Spain

• Deficit in 2010 10% (11.4% in 2009)
• Target date for bringing deficit below 3% – 2013
• Plans Spending cuts including reduction in civil service hirings, higher taxes
• National retirement age will be increased from 2013 from aged 65 to 67 years.

Greece

• Deficit in 2010 8.7%
• Target date for bringing deficit below 3% – 2012
• Plans Boost tax revenues, contain public sector spending rises, curb public sector hiring, crack down on tax evasion
• A pay freeze and reduced allowances will cut public sector wages by 3 – 4%. This is causing strikes and street protests. Greek farmers are also looking for higher subsidies and were blocking border crossings and roads.
• At the end of January 2010, Greek 10 year bonds were sold at yield 6.925% down from a peak that week of 7.25%. The Greeks need to find €24 billion in the four months to May 2010 to refinance debt. Keep in mind that Greece will have to pay over €1.65 billion in interest on this next year alone!!