October 6, 2010 / 1:49 PM / 9 years ago

TIMELINE-Euro zone struggles with debt

Oct 6 (Reuters) - Here is a timeline of events in the euro zone’s struggle with debt:


Oct. 6 - Fitch cuts Ireland’s credit rating to A+ from AA-, citing the huge cost of cleaning up its banks. Fitch also put its rating on a negative outlook.

Oct. 4 - Greece unveils another austerity budget aimed at cutting its deficit to below a 7.6 percent-of-GDP target.

Sept. 30 - Ireland discloses a worst case price tag of over 50 billion euros ($68 billion) for bailing out its banks and announces it will have to make more budget savings.

— Spain loses its final triple-A credit rating as Moody’s cuts it by one notch to Aa1, citing the budget impact of slower economic growth.

— Spain presents its budget to parliament with the government aiming to cut its net debt issuance in 2011 to 43.3 billion euros from the 76.2 billion originally planned for 2010.

Sept. 29 - Portugal announces new spending cuts and tax rises for 2011.

— Thousands of people march in a day of protests across Europe against government austerity measures that unions say will slow economic recovery and punish the poor.

— The European Commission proposes making repeat deficit offenders that breach EU budget rules, deposit 0.2 percent of their gdp with Brussels.

Sept. 28 - Standard & Poor’s and Fitch warn Ireland’s rating is at risk of further downgrades triggering a fresh leap in borrowing costs and calls for the beleaguered government to bring forward its budget from December. Sept. 24 - Spain presents a tough 2011 budget, deepening an austerity drive and taxing the rich more heavily.

Sept. 23 - Workers in France stage their second 24-hour strike against unpopular pension reforms. Sept. 10 - The International Monetary Fund says Greece is ahead of schedule in economic reform and is disbursing an additional 2.57 billion euros under a standby loan.

Aug. 24/25 - Standard & Poor’s cuts Ireland’s long-term rating by one notch to ‘AA-‘, and assigns the country a negative outlook. Moody’s cut its rating to Aa2 in July.

Aug. 13 - European economic growth accelerates sharply in Q2 as Germany’s best performance in 20 years more than makes up for the struggles of Spain, Ireland and recession-ravaged Greece. Aug. 5 - EU, IMF and ECB officials applaud Greek efforts to exit its debt crisis, endorsing a fresh 9 billion euro payment from the EU/IMF bailout scheme.

July 29 - Italy’s 25 billion euro ($32.5 billion) package of austerity measures clears its final parliamentary hurdle.

— The European Commission’s economic sentiment index rises to a 28-month high in July, buoyed by figures from Germany.

July 23 - European banks are given “stress tests” on their ability to deal with a debt crisis. Of the 91 European banks tested, seven fail and another 17 barely pass. July 13 - Moody’s cuts Portugal’s debt rating by two notches to A1, citing rising debt and weak growth prospects.

July 8 - Greece’s main private and public sector unions strike for 24 hours against sweeping pension reform. Greek lawmakers vote in favour of the pension reform.

July 7 - Germany agrees on a four-year, 80 billion euro ($100 billion) austerity plan, committing the country to cutting its budget deficit.

June 29 - Greece says its debt reached 133 percent of GDP in 2010.

June 25 - The CGIL, Italy’s biggest union with 6 million members, holds rallies in Rome, Milan and other cities to force the government to redraft a 25 billion euro austerity package.

June 22 - Spain’s parliament ratifies labour reforms to restore economic growth by easing the cost of hiring and firing.

June 16 - France announces a reform of its pension system raising the retirement age gradually to 62 in 2018 from 60.

June 14 - Moody’s cuts Greece’s credit rating four notches to Ba1 or junk status due to risks to bailout package.

June 9 - Liberals win most votes in Dutch election but consensus on bringing public finances under control will be hard. Deficit set to reach 6.6 percent of GDP in 2010.

— Portuguese parliament approves latest austerity package.

June 8 - Spanish workers stay at home in protest against austerity plans.

May 28 - Fitch cuts Spain’s credit rating in response to record household and corporate debt and mounting public debt.

May 27 - Spain’s government wins parliamentary approval for its 15 billion euro austerity package by a single vote.

May 25 - Italy approves a 25 billion euro austerity package with the aim of cutting the deficit to 2.7 percent of GDP in 2012 from 5.3 percent in 2009.

May 18 - Germany announces a unilateral ban on “naked” short selling of shares in its top 10 financial institutions, euro zone government bonds and related credit default swaps.

May 13 - Portugal’s prime minister and opposition leader draw up steps to slash the deficit.

May 10 - Global policymakers install an emergency financial safety net for the euro zone worth 750 billion euros to calm financial markets and avert contagion from the Greek crisis. The package consists of 440 billion euros in guarantees from euro zone states, plus 60 billion euros in a European debt instrument. The IMF is to contribute 250 billion euros.

May 2 - Prime Minister George Papandreou says Greece has reached a deal with the EU and IMF opening the door to a bailout in return for extra savings of 30 billion euros over three years. Athens will get loans worth 110 billion euros in instalments conditional on reforms over three years.

April 27 - Standard & Poor’s downgrades Greek government debt to junk status. The next day it downgrades Spain’s debt because of poor growth prospects.

— S&P cuts Portugal’s rating by two notches to A-minus.

April 22 - Eurostat says Greece’s 2009 budget deficit was 13.6 percent of GDP, not the 12.7 percent it had reported. The next day Papandreou asks for activation of EU/IMF aid.

April 11 - Euro zone finance ministers approve a 30 billion euro aid mechanism for Greece.

March 5 - A package of public sector pay cuts and tax increases is passed in Greece to save an extra 4.8 billion euros. State-funded pensions are frozen.

Jan. 29 - Spain announces a plan to save 50 billion euros, including government spending cuts totalling 4 percent of GDP.

Jan. 14 - Greece unveils a stability programme, saying it will aim to cut its deficit to 2.8 percent of GDP by 2012.


Dec. 22 - Moody’s cuts Greek debt to A2 from A1 over soaring deficits, the third rating agency to downgrade Greece.

Dec. 16 - Standard & Poor’s cuts Greece’s rating by one notch, to BBB-plus from A-minus, saying its austerity programme is unlikely to produce a sustainable reduction in public debt.

Dec. 9 - In Ireland, a budget delivers savings of over 4 billion euros. Public service pension age rises to 66 from 65.

Dec 8 - Fitch Ratings cuts Greek debt to BBB+, the first time in 10 years it has been rated below investment grade.

Nov. 5 - Papandreou’s new socialist government says Greece’s 2009 budget deficit will be 12.7 percent of GDP.

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