EU austerity drive country by country

Europe is in the grip of tough austerity measures - some of the deepest public sector cuts for a generation.

Shockwaves are still being felt from the 2008 financial meltdown, which paralysed bank lending and left much of Europe reeling from huge budget deficits and public debt.

In the troubled 17-nation eurozone Greece and the Irish Republic received huge bail-outs last year from the EU and International Monetary Fund (IMF). Portugal is next in line for such a rescue.



Investors' anxiety about the debts of these eurozone "periphery" countries sent the interest rates (yields) on their sovereign bonds soaring, making it ever harder for them to borrow in international markets.

The 27 EU member states aim to cut their budget deficits to a maximum of 3% of GDP by the financial year 2014-15, so what belt-tightening measures are the countries taking?

PORTUGAL

Caretaker Prime Minister Jose Socrates said on 6 April he had asked the EU for financial aid - a move that had long been expected. He resigned in March after the opposition rejected a new austerity package. He is acting PM pending an early election on 5 June.

Various austerity measures have already been adopted. Top earners in the public sector, including politicians, will see a 5% pay cut. VAT (sales tax) will rise by 1% and there will be income tax hikes for those earning more than 150,000 euros (£131,000). The military budget is being cut sharply and two high-speed rail projects have been postponed.

Public services, including flights and rubbish collection, were paralysed on 24 November by a general strike over the cuts.

IRISH REPUBLIC

In December the former Irish government accepted an EU-IMF bail-out worth 85bn euros (£75bn; $119bn). But the new coalition government of Enda Kenny wants to get the interest rate on the loan reduced.

Since 2008, the cost of bailing out the stricken banks has been 46bn euros, a huge hole in the government's finances. But that cost will climb to almost 70bn euros because bank stress tests, published in March 2011, showed that four major banks would have to be recapitalised.

The toughest budget in the nation's history included a pledge to trim the deficit by 6bn euros in 2011. Government spending has been slashed by 4bn euros, with all public servants' pay cut by at least 5% and social welfare reduced.
UK

The Conservative-Liberal Democrat coalition government has announced the biggest cuts in state spending since World War II.

Savings estimated at about £83bn are to be made over four years. The plan is to cut 490,000 public sector jobs. Most Whitehall departments face budget cuts of 19% on average. The retirement age is to rise from 65 to 66 by 2020.

The budget deficit is about 10% of GDP and unemployment - officially 2.53 million - is at its highest level since 1994.

Public anger over the cuts has grown. More than 250,000 people demonstrated in London on 26 March - the city's biggest protest since the 2003 Iraq war.

FRANCE

France has announced plans to cut spending by 45bn euros (£39bn) over the next three years. It will include savings through closing tax loopholes and withdrawing temporary economic stimulus measures.

The highest earners will also be required to pay an extra 1% income tax.

The plan to raise the retirement age from 60 to 62 and the full state pension age from 65 to 67 provoked major protests and strikes last year.

GREECE

The Greek government pledged to end its economic woes by making drastic spending cuts and boosting tax revenue in return for a 110bn-euro (£95bn) bail-out from the EU and IMF.

The rescue deal was agreed last May, after Greece's budget deficit - 13.6% of GDP - turned out to be much higher than was originally reported.

Efforts are being made to prevent tax evasion and combat civil service corruption. Early retirement schemes are being curbed. The average retirement age is set to rise from 61.4 to 63.5.

Public sector bonus payments will be scrapped; public sector salaries and pensions frozen for at least three years; VAT will rise from 19% to 23% and taxes on fuel, alcohol and tobacco by 10%.

The austerity measures have triggered public sector strikes and violence on the streets of Athens.

NETHERLANDS

The centre-right coalition formed after months of negotiation on 8 October said it wanted to cut the budget by 18bn euros ($24bn; £15bn) by 2015.

But the new government will have to rely on the radical Freedom Party to enact legislation and there are doubts about its long-term viability.

SPAIN

Unemployment has more than doubled - to about 20% - since 2007. It is the highest rate in the EU and Spain's biggest economic problem.

The government has approved an austerity budget for 2011 which includes a tax rise for the rich and 8% spending cuts.

Government workers have had their pay cut by 5% and salaries will be frozen for 2011. The retirement age is being raised to 67.

The tax on tobacco is to rise 28%, and Madrid also plans to sell off 30% of the Spanish national lottery and a minority stake in the country's airport authority.

ROMANIA

The government proposed wage cuts of 25% and pension cuts of 15% last May to reduce the country's budget deficit.

There were protests and Interior Minister Vasile Blaga resigned after thousands of police officers went on strike over the 25% pay cut.

Romania's economy shrank more than 7% in 2009 and it needed an IMF bail-out in order to meet its wage bill.

ITALY

The government has approved austerity measures worth 24bn euros for 2011-12.

Italy aims to cut public sector pay and freeze new recruitment. Only one employee will be replaced for every five who leave.

Public sector pensions and local government spending are also being targeted, and there are plans to crack down on tax evasion. Funding to city and regional authorities is expected to be cut by more than 13bn euros.

GERMANY

The government plans to cut the budget deficit by a record 80bn euros by 2014. The total deficit in 2009 was 3.1% of GDP, but it is projected to be above 5% for 2010.

The plans include a cut in subsidies to parents, 10,000 government job cuts over four years, and higher taxes on nuclear power.

Unlike many of its neighbours, Germany is enjoying vigorous economic growth - GDP rose by 3.6% in 2010. Unemployment is lower than before the 2008 crisis.