Austerity anger grows in Europe

8th June 2010, Comments 0 comments

Tens of thousands of public workers went on strike in Spain and powerful German unions warned of street protests Tuesday amid growing anger over huge austerity cuts by debt-stricken governments.

Tensions also mounted between European Union governments over how to slash spending with Britain rejecting an EU plan for all national budgets to be seen by other nations before they are passed.

Garbage was left uncollected and high-speed trains delayed in Spain as tens of thousands of civil servants stopped work to protest spending cuts by the socialist government.

Prime Minister Jose Luis Rodriguez Zapatero, who is traditionally close to unions, has ordered an average pay cut this year of five percent for public sector salaries and a pay freeze next year

Unions said roughly 75 percent of the 2.6 million public workers heeded the strike call but the government put the participation level at just 11 percent.

Spain has ordered 65 billion euros (78 billion dollars) of spending cuts in a bid to slash the public deficit to the EU limit of three percent of gross domestic product by 2013 from 11.2 percent last year.

Hundreds of people staged a rally outside of the economy ministry in Madrid chanting "Zapatero resign!" The two largest unions, the CCOO and the UGT, have threatened a general strike by all workers if the government imposes labour reforms.

In Germany, industry, trade unions and the media criticised Chancellor Angela Merkel over the 86 billion euros of budget cuts she ordered between 2011 and 2014.

"It is not the poor who have lived beyond their means -- it is the rich who have," said the head the German Federation of Trade Unions, Michael Sommer.

He said labour would band together with other affected groups in street protests: "And that will really hurt the government."

The leader of the Paritaetische association of charities, Ulrich Schneider, slammed the cuts as "indecent".

Even big business joined the assault, with German banks and the airline industry slamming a tax on financial transactions from 2012 and a levy on flights.

"These are serious times, these are difficult times. We cannot afford everything we would like if we hope to plan for the future and that is why the budget has been laid out like this for the coming years," Merkel told reporters as she announced the cuts Monday.

European finance ministers on Monday agreed a new 525 billion dollar fund for debt stricken nations and EU president Herman Van Rompuy said they also agreed a right to oversee national budgets but Britain rejected any move to let Brussels see the national budget before parliament.

"The budget will be presented to parliament first," British Financial Secretary to the Treasury, Mark Hoban, insisted in a statement as EU finance ministers held the second day of a meeting in Luxembourg.

France had demanded that Britain fall into line with other EU nations.

However Fitch Ratings warned Britain that needs to put its public finances in order much quicker as it faces a "formidable" fiscal challenge.

Britain's finances need "a strong medium term consolidation strategy -- including a faster pace of deficit reduction than set out" in April by the previous Labour government, the international ratings agency said.

Britain's top AAA rating "is supported by its strong policy institutions, advanced, diversified and flexible economy, exceptional financing flexibility and historical track record of fiscal consolidation.

"However, the rise in public debt ratios since 2008 is faster than any other AAA rated sovereign and the ... adjustment required to stabilise debt is amongst the highest of advanced countries," Fitch noted in a statement.

The new British government is also planning major cuts.

Prime Minister David Cameron said Monday that Britain's finances were "even worse than we thought" as he warned of "painful" cuts to tackle the record deficit he estimated at 770 billion pounds (1.12 trillion dollars, 930 billion euros).

The IMF warned in a new report that "fiscally unsustainable policies" had to end in many eurozone countries. "Policies need to move urgently from crisis management to fundamental reforms," the Fund said.


© 2010 AFP

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