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Bonds News

FACTBOX-Austerity measures around the euro zone

Sept 29 (Reuters) - France’s centre-right government will curb civil service spending, scrap tax breaks and otherwise count on accelerating economic expansion to replenish public coffers in 2011 under a budget bill unveiled on Wednesday.

Here are details of some austerity measures in the euro zone:

* FRANCE:

-- The budget aims to cut the public deficit to 6 percent of gross domestic product in 2011 from 7.7 percent in 2010, in the first phase of a plan to trim the shortfall to the EU’s 3-percent ceiling in 2013, and 2 percent in 2014.

-- 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. French Prime Minister Francois Fillon ruled out last Friday any retreat on his government’s plans.

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

For more details, click on [ID:nLDE68Q0VR]

* SPAIN:

-- Confirmed in its budget on Sept. 24 it expected the public deficit to fall to 3.0 percent of GDP by 2013 from 9.3 percent of GDP in 2010.

-- Public spending to be cut by 7.9 percent, excluding autonomous regions, to 122 billion euros in 2011.

-- Ministry spending to be cut on average 16 pct.

For more details, click on [ID:nLDE68M0LM]

* GREECE:

-- Greek lawmakers have 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. For more details, click on [ID:nLDE65N0KS]

-- Greece plans to narrow its budget shortfall from 13.6 percent of GDP in 2009 to 8.1 percent this year, 7.6 percent in 2011 and 2.6 percent in 2014.

-- Public sector wages were cut by an average 15 percent in 2010 and will freeze until 2014. Private sector wages were frozen for this year and will rise in line with euro area inflation in 2011 and 2012.

-- The main VAT rate was increased by 4 percentage points to 23 percent.

* PORTUGAL:

-- Parliament approved austerity package in June to reduce the budget deficit to 7.3 percent of GDP in 2010 and then to 4.6 percent in 2011, from 9.4 percent in 2009. Portugal aims to save 2 billion euros in 2010 and 4.5 billion next year.

-- Portugal ruled out drawing on the euro zone aid package, citing a bond issuance programme that is more than 90 percent complete for the year, as well as prospects of overshooting 0.7 percent growth target this year.

-- The minority Socialist government will present the draft 2011 budget by Oct. 15. The government has said it will include significant spending cuts and additional measures on the revenue side. For more details, click on [ID:nLDE68R17Y]

* ITALY:

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

-- 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 13 billion euros of spending cuts in 2011-2012.

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

For more details, click on [ID:nLDE66E0VR]

* GERMANY:

-- Chancellor Angela Merkel said her government aims to save around 80 billion euros between 2011 and 2014 and get the German budget deficit below European Union limits by 2013. The cabinet backed a bill covering the bulk of the 80 billion euro ($101 programme over the next four years on Sept 1.

-- The budget, before parliament by end of November, will cut spending to 307.4 billion euros next year, a 3.8 percent decrease from 2010, and reduce the deficit to 60 billion.

-- The cabinet agreed a package in June which will cut welfare spending by 30 billion euros 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.

-- Hopes to realise 5.5 billion euros through subsidy cuts and raise 2 billion a year with a financial transaction tax.

-- Defence Ministry experts have drawn up a list of potential savings worth more than 9.3 billion euros.

* IRELAND:

-- Ireland’s borrowing costs leapt again on Tuesday after two credit rating agencies warned its debt is at risk of further downgrades, piling pressure on the government to bring forward its budget, due in December.

-- Ireland has carried out some of the harshest austerity measures in the euro zone. Its public sector unions passed a pay deal in June, ending low-key protests but limiting Dublin’s options in making at least 3 billion euros of savings apiece in the next two budgets.

-- One measure in last December’s budget was cutting public service salaries by 5-15 percent. The budget inflicted 4 billion euros of cuts. The government has promised no further public sector pay cuts until 2014.

-- Ireland said in July that it would cut its budget for infrastructure projects in 2011 to 5.5 billion euros, generating 1 billion euros of savings, or one-third of the total amount required in December’s budget.

For more details, click on [ID:nLDE68E1G3] (Writing by David Cutler, London Editorial Reference Unit;)

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