June 14, 2010 / 11:59 AM / 10 years ago

Timeline: Euro zone debt crisis

LONDON (Reuters) - Here is a timeline of key events in the euro zone debt crisis since last November, when a new Greek government shocked markets by doubling estimates for Greece’s 2009 budget deficit.

June 12 - Thousands of Germans protest against Berlin’s austerity drive, adding to pressure on Chancellor Angela Merkel’s increasingly unpopular coalition.

June 11 - Prime Minister George Papandreou vows Greece will not default on its loans. Its austerity measures are intended “to exclude default and to exclude exit from the euro zone.”

June 10 - Negotiations to overhaul Spain’s rigid labor market collapse, leaving the government to impose looser hire-and-fire laws without trade union backing.

June 9 - Austerity-minded Liberals win Dutch elections but consensus on bringing public finances under control will be tough: the deficit is set to reach 6.6 percent of GDP in 2010.

Portuguese parliament approves latest austerity package. Treasury chief rules out drawing on the euro zone aid package, citing a successful bond sale and economic recovery in Q1.

June 8 - Spain’s unions say 75 percent of public sector workers stay at home in a protest against austerity plans.

Greece’s consumer inflation jumps to a higher-than-expected 5.4 percent in May, its highest since August 1997.

June 7 - Merkel’s coalition agrees a package of budget cuts and taxes to bring Germany’s structural deficit within EU limits by 2013 and revive her political fortunes. The measures aim to deliver a total 80 billion euros of savings over three years.

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 one vote.

May 25 - Italy’s cabinet approves a 24 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, in an attack on the speculation that it blames for the debt crisis, announces a unilateral ban on “naked” short selling of shares in its top 10 financial institutions, of euro zone government bonds and of related credit default swaps (CDS).

May 13 - Portugal’s prime minister and opposition leader draw up steps to slash the deficit, including public sector pay cuts. The deficit is due to fall to 4.6 percent in 2011 from 9.4 percent in 2009.

May 10 - Global policymakers install an emergency financial safety net worth 750 billion euros to bolster financial markets and shore up the euro against 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 6 - Greek parliament approves latest austerity bill.

May 4/5 - Three people are killed when a bank is set on fire as public workers in Greece stage a 48-hour strike. Up to 50,000 people protest in Athens.

May 2 - Papandreou says Greece has done a deal with the EU and IMF opening the door to a bailout in exchange for additional budget cuts of 30 billion euros over three years.

The package amounts to 110 billion euros over three years, and is the first rescue of a member of the 16-nation euro zone.

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

April 23 - Papandreou asks for activation of EU/IMF aid.

April 22 - Eurostat says Greece’s 2009 budget deficit was 13.6 percent of GDP, not the 12.7 percent it had reported.

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

March 25 - Euro zone leaders and the IMF agree to create a joint financial safety net to help Greece.

March 5 - A new 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.

February 5 - Spain attempts to raise the retirement age to 67 from 65, triggering a mass union protest.

January 29 - Spain announces a plan to save 50 billion euros, including government spending cuts totaling 4 percent of GDP. Public sector pay is to be cut 4 percent.

January 14, 2010 - Greece unveils a stability program, saying it will aim to cut its deficit to 2.8 percent of GDP by 2012.

December 22, 2009 - Moody’s cuts Greek debt to A2 from A1 over soaring deficits, the third rating agency to downgrade Greece.

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

December 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.

November 20 - A final budget draft shows Greece aims to cut the deficit to 8.7 percent of GDP in 2010 to show EU partners and markets it is serious about restoring fiscal health.

November 5 - Papandreou’s new socialist government says Greece’s 2009 budget deficit will be 12.7 percent of GDP, more than twice the previously published figure, and pledges to save the country from bankruptcy.

Writing by David Cutler, London Editorial Reference Unit

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