EU AUSTERITY AND REFORM: A COUNTRY BY COUNTRY TABLE (Updated May 3)     Print

By Zachary Laven and Federico Santi

In response to the sovereign debt crisis in Europe the Fiscal Compact was signed in March by every EU member state except the Czech Republic and the United Kingdom. The fate of this Compact has been made uncertain by the elections in France and Greece, which are seen as a popular rejection of its terms and effects. Inspired by Germany and other proponents of fiscal discipline in Europe, the pact aims to prevent excessive deficits requiring bailouts like the ones needed by Greece, Portugal, Ireland, and Hungary. It requires national budgets to be in balance or in surplus, the EU’s new “golden rule.” The treaty will enter into effect on January 1, 2013, if by then twelve out of the 17 members of the Eurozone will have ratified it.

 

Up to now the following legislatures have adopted the pact: Portugal, Slovenia. Ireland's ratification procedure requires a national referendum, which is set to be held on May 31st, 2012.

Meanwhile, the crisis has deepened. Data in early May showed that the unemployment rate for the Eurozone had reached 10.9 percent, the highest since the introduction of the common currency in 1999. The European Commission called the figures “very worrying” and indicated that growth would join the EU agenda along with fiscal consolidation.

Among the most important steps to be taken, the Commission highlighted reforms of labor laws. Broadly speaking, EU countries are taking or considering these steps to cut deficits and increase flexibility in the public-private labor market nexus:

-         Reduction of the minimum wage

-         Pay freezes and reduction of salary bonuses

-         Pension cuts and increased retirement age

-         Reduction of severance pay

-         Reduction in vacation days

-         Easing of restrictions on layoffs

-         Reduction in duration and amount of unemployment benefits

-         Collective bargaining agreements no longer applicable economy-wide.

-         Preference for company-specific rather than sector-wide agreements

-         Reduction in welfare benefits

-         Expansion of part-time and temporary work

 

[table from Irene Kyriakopoulos, "Europe's Economic Crisis:  Fiscal Impacts," INSS Roundtable on Europe's Economic Crisis. NDU, 4/12]

 

 

The following is a country by country table of specific measures as of May 1, 2012. This list will be regularly updated.

 

Austria

GDP:                                  €286.2 billion

National debt:                     €205.5 billion (71.8 percent of GDP)

Government Budget:           €150.4 billion (53.0 percent of GDP)

Annual deficit:                     €12.6 billion (4.4 percent of GDP)

Unemployment rate:            4.0 percent¹

[Eurostat – 2010 figures]

The Austrian budget deficit for 2011 fell to 2.6 percent. Austria adopted further austerity measures in March 2012, meant to save €26.5 billion through 2016, 76 percent of which through budget cuts and the rest from the closing of tax loopholes. They mandate:

 

 

Belgium

GDP:                                  €354.3 billion

National debt:                     €340.5 billion (96.2 percent of GDP)

Government Budget:           €187.0 billion (53.1 percent of GDP)

Annual deficit:                     €14.5 billion (4.1 percent of GDP)

Unemployment rate:            7.3 percent¹

[Eurostat – 2010 figures]

After 18 months with a care-taker government, the new administration passed a set of austerity measures in December 2011. The €11.3 billion deficit reduction plan is intended to reduce the government deficit from 3.2 to 2.8 percent of GDP by 2012 and balance the budget by 2015. It mandates:

 

 

Bulgaria

GDP:                                  €36.0 billion

National debt:                     €10.6 billion (61.5 percent of GDP)

Government Budget:           €13.6 billion (37.7 percent of GDP)

Annual deficit:                     €1.1 billion (3.1 percent of GDP)

Unemployment rate:            12.6 percent¹

[Eurostat – 2010 figures]

Bulgaria is not in the Eurozone. The Bulgarian Lev (BGN) is pegged to the euro at a rate of approximately 2 leva per euro. Measures in Bulgaria include:

 

 

Cyprus

GDP:                                  €17.3 billion

National debt:                     €10.6 billion (61.5 percent of GDP)

Government Budget:           €8.1 billion (46.6 percent of GDP)

Annual deficit:                     €0.9 billion (5.3 percent of GDP)

Unemployment rate:            10.0 percent¹

[Eurostat – 2010 figures]

 

 

Czech Republic

GDP:                                  €149.3 billion

National debt:                     €56.1 billion (37.6 percent of GDP)

Government Budget:           €65.6 billion (45.2 percent of GDP)

Annual deficit:                     €7.2 billion (4.8 percent of GDP)

Unemployment rate:            6.7 percent¹

[Eurostat – 2010 figures]

After passing a confidence vote on austerity measures by a narrow margin in late April, 2012, the government announced it would focus on growth-enhancing measures. Austerity measured adopted to date include:

 

 

Denmark

GDP:                                  €235.6 billion

National debt:                     €103.0 billion (43.7 percent of GDP)

Government Budget:           €136.5 billion (58.2 percent of GDP)

Annual deficit:                     €6.12 billion (2.6 percent of GDP)

Unemployment rate:            8.1 percent¹

[Eurostat – 2010 figures]

 

 

Estonia

GDP:                                  €14.3 billion

National debt:                     €0.9 billion (6.7 percent of GDP)

Government Budget:           €477.8 billion (45 percent of GDP)

Annual deficit:                     Surplus of €0.03 billion (0.2 percent of GDP)

Unemployment rate:            11.7 percent³

[Eurostat – 2010 figures]

 

 

Finland

GDP:                                  €180.3 billion

National debt:                     €87.1 billion (48.3 percent of GDP)

Government Budget:           €99.3 billion (55.1 percent of GDP)

Annual deficit:                     €4.5 billion (2.5 percent of GDP)

Unemployment rate:            7.5 percent¹

[Eurostat – 2010 figures]

Finland has implemented a €2.7 billion austerity program for 2012 including cuts in public spending and tax increases. It mandates:

 

 

France

GDP:                                  €1,932.8 billion

National debt:                     €1,590.7 billion (82.3 percent of GDP)

Government Budget:           €1,094.0 billion (56.2 percent of GDP)

Annual deficit:                     €137.2 billion (7.1 percent of GDP)

Unemployment rate:            10.0 percent¹

[Eurostat – 2010 figures]

An €11 billion deficit reduction plan was unveiled in August 2011. These measures aim at bringing the deficit down from 7.1 to 5.7 percent in 2011, 4.5 percent in 2012, three percent in 2013 and eventually balance the budget by 2016. It mandates:

A subsequent €7 billion deficit reduction plan, with a stronger focus on spending cuts, was unveiled in September 2011 in response to a downward revision of growth forecast. It mandates:

 

 

Germany

GDP:                                  €2,476.8 billion

National debt:                     €2,060.7 billion (83.2 percent of GDP)

Government Budget:           €1,164.1 billion (46.6 percent of DP)

Annual deficit:                     €106.5 billion (4.3 percent of GDP)

Unemployment rate:            5.6 percent¹

[Eurostat – 2010 figures]

Germany plans on having a balanced budget by 2016. No real austerity measures in the 2012 budget, deficit reduction will be achieved exclusively through growth.

 

 

Greece

GDP:                                  €227.3 billion

National debt:                     €329.4 billion (144.9 percent of GDP)

Government Budget:           €113.9 billion (49.5 percent of GDP)

Annual deficit:                     €24.1 billion (10.6 percent of GDP)

Unemployment rate:            21.7 percent²

[Eurostat – 2010 figures]

Greece has received two bailout packages from the EU and IMF. The first package (May 2010) is worth €110 billion while the second package (February 2012) amounted to an additional €130 billion. The terms of these bailouts include measures for the liberalization of protected economic sectors. In addition, the second bailout requires Greece's private creditors to accept a 53 percent write-down on the face value of their €200 billion in holdings. This “haircut” on the value of privately held Greek debt is meant to bring Greece’s national debt to around 120 percent of GDP by 2020 from the current 164 percent. It mandates:

 

 

Hungary

GDP:                                  €97.0 billion

National debt:                     €78.9 billion (81.3 percent of GDP)

Government Budget:           €48.0 billion (48.9 of GDP)

Annual deficit:                     €4.1 billion (4.2 percent of GDP)

Unemployment rate:            11.2 percent¹

[Eurostat – 2010 figures]

Hungary received a €19 billion emergency bailout in 2008 in the immediate aftermath of the financial crisis, with funds from the IMF, the EU and the World Bank. The country is currently involved in talks the EU for a second rescue package. Hungary’s 2012 Budget aims to cut the deficit by 2.2 percent of GDP by 2013. It mandates:

 

 

Ireland

GDP:                                  €156.0 billion

National debt:                     €144.3 billion (92.5 percent of GDP)

Government Budget:           €103.2 billion (67.0 percent of GDP)

Annual deficit:                     €48.8 billion (31.3 percent of GDP)

Unemployment rate:            14.5 percent¹

[Eurostat – 2010 figures]

Ireland was forced to require a €85 billion bailout by the EU and IMF in 2010. The conditions for the bailout required fiscal tightening measures:

 

 

Italy

 

GDP:                                  €1,556 billion

National debt:                     €1,837 billion (118.1 percent of GDP)

Government Budget:           €782 billion (50.3 percent of GDP)

Annual deficit:                     €71 billion (4.6 percent of GDP)

Unemployment rate:            9.8 percent¹

[Eurostat – 2010 figures]

In September 2011 a €48 billion austerity package was unveiled, followed in December 2011 by a further €20 billion deficit reduction plan (90 percent of which from increased revenue) introduced by the newly instated Monti government. The measures include:

In early March, the government began a spending review which identified €295 billion in possible public spending rationalization, €80 billion of which available in the short run (one year), out of a total government budget of €650 billion excluding interest payments on government debt.

 

 

Latvia

GDP:                                  €18.52 billion

National debt:                     €6.79 billion (36.7 percent of GDP)

Government Budget:           €8.19 billion (44.2 percent of GDP)

Annual deficit:                     €1.80 billion (9.7 percent of GDP)

Unemployment rate:            14.6 percent³

[Eurostat – 2010 figures]

Latvia accepted a €7.5 billion rescue loan in 2009, with funds from the EU, IMF, World Bank, European Bank for Reconstruction and Development and several Nordic countries. The government introduced a three billion Euros deficit reduction plan as part of the loan agreement of 2009. The budget deficit is expected to fall to 2.5 percent this year, down from 10 percent in 2009. The plan mandated:

 

 

Lithuania

GDP:                                  €27.5 billion

National debt:                     €10.4 billion (38 percent of GDP)

Government Budget:           €11.3 billion (41.3 percent of GDP)

Annual deficit:                     €1.9 billion (7 percent of GDP)

Unemployment rate:            14.3 percent³

[Eurostat – 2010 figures]

 

 

Luxembourg

GDP:                                  €40.3 billion

National debt:                     €7.7 billion (19.1 percent of GDP)

Government Budget:           €17.2 billion (41.2 percent of GDP)

Annual deficit:                     €0.4 billion (1.1 percent of GDP)

Unemployment rate:            5.2 percent¹

[Eurostat – 2010 figures]

 

 

Malta

GDP:                                  €6.2 billion

National debt:                     €4.3 billion (69 percent of GDP)

Government Budget:           €2.6 billion (42.3 percent of GDP)

Annual deficit:                     €0.2 billion (3.6 percent of GDP)

Unemployment rate:            6.8 percent¹

[Eurostat – 2010 figures]

Malta has not adopted any austerity measures. However, the 2012 budget shows savings amounting to 0.59 percent of GDP, emanating from cuts in recruitment, overtime, operational and maintenance expenditure, and cuts in spending by government entities.

 

 

Netherlands

GDP:                                  €588.4 billion

National debt:                     €370.1 billion (62.9 percent of GDP)

Government budget:            €302.9 billion (51.2 percent of GDP)

Annual deficit:                     €30 billion (5.1 percent of GDP)

Unemployment rate:            5.0 percent¹

[Eurostat – 2010 figures]

The government of the Netherlands fell the third week of April 2012 due to a breakdown in coalition talks over €15 billion in budget cuts needed in order to bring government deficit under three percent, as required by the new Fiscal Compact. Elections will be held in September 2012. Previous austerity measures include:



Poland

GDP:                                  €354.3 billion

National debt:                     €194.5 billion (54.9 percent of GDP)

Government Budget:           €161.9 billion (45.7 percent of GDP)

Annual deficit:                     €27.6 billion (7.8 percent of GDP)

Unemployment rate:            10.1 percent¹

[Eurostat – 2010 figures]

 

 

Portugal

GDP:                                  €172.6 billion

National debt:                     €161.0 billion (93.3 percent of GDP)

Government Budget:           €87.5 billion (50.7 percent of GDP)

Annual deficit:                     €16.9 billion (9.8 percent of GDP)

Unemployment rate:            15.3 percent¹

[Eurostat – 2010 figures]

Portugal received a €78 billion bailout program from the IMF, ECB and EU which was approved in May 2011. Austerity measures were adopted as part of the loan agreement, mandating:

 

 

Romania

GDP:                                  €124.0 billion

National debt:                     €38.44 (31 percent of GDP)

Government Budget:           €49.7 billion (40.8 percent of GDP)

Annual deficit:                     €8.6 billion (6.9 percent of GDP)

Unemployment rate:            7.5 percent¹

[Eurostat – 2010 figures]

The government was forced to resign in January 2012 in response to protests to the austerity measures adopted the previous year. The new government in turn failed to pass a confidence vote in April 2012, and new elections are scheduled for the fall. Austerity measures adopted to date include:

 

 

Slovakia

GDP:                                  €65.9 billion

National debt:                     €27.0 billion (41 percent of GDP)

Government Budget:           €27.0 billion (41.0 percent of GDP)

Annual deficit:                     €5.1 billion (7.7 percent of GDP)

Unemployment rate:            13.9 percent¹

[Eurostat – 2010 figures]

With a new government just coming into power after elections in March 2012, no austerity measures have been adopted to date.

 

 

Slovenia

GDP:                                  €35.4 billion

National debt:                     €13.7 billion (38.8 percent of GDP)

Government Budget:           €17.7 billion (49.9 percent of GDP)

Annual deficit:                     €2.0 billion (5.8 percent of GDP)

Unemployment rate:            8.5 percent¹

[Eurostat – 2010 figures]

The government put forward a plan to cut expenditure by €818 million, bringing the deficit down to three percent of GDP within a year. It mandates:

 

 

Spain

GDP:                                  €1,051 billion

National debt:                     €641.1 billion (61 percent of GDP)

Government Budget:           €477.8 billion (45.0 percent of GDP)

Annual deficit:                     €97.7 billion (9.3 percent of GDP)

Unemployment rate:            24.1 percent¹

[Eurostat – 2010 figures]

The EU has agreed to allow Spain to breach its intended deficit-reduction target of 4.4 percent for 2012, to 5.3 percent of GDP in light of the deep recession that has hit the country. Spain still intends to meet the three percent budget deficit target for 2013 as mandated by the new fiscal compact. Austerity measures adopted to date include:

 

 

Sweden

GDP:                                  €346.5 billion

National debt:                     €137.2 billion (39.7 percent of GDP)

Government Budget:           €183.6 billion (53 percent of GDP)

Annual deficit:                     Surplus of €0.7 billion (0.2 percent of GDP)

Unemployment rate:            7.3 percent¹

[Eurostat – 2010 figures]

Sweden has not implemented stringent austerity measures given its stable fiscal situation.

 

 

UK

GDP:                                  €1,706.3 billion

National debt:                     €1,363.3 (79.9 percent of GDP)

Government Budget:           €862.1 (50.9 percent of GDP)

Annual deficit:                     €175.7 billion (10.3 percent of GDP)

Unemployment rate:            8.2 percent²

[Eurostat – 2010 figures]

 

___________________

 

¹ Eurostat – March 2012 figures

² Eurostat – Januray 2012 figures

³ Eurostat – 4th quarter 2011 figures