Greek cuts to be deeper than trailed

[alp227]

Source: FT

Planned cuts to Greece’s public expenditure will be even deeper than previously announced, the government has said, as fears rise that the scale of the proposed reductions may test the ruling coalition’s unity.

“The net savings on the expenditure side will be equal to €11.6bn, but total spending cuts will be higher, to the tune of €13.5bn (or 6.8 per cent of gross domestic product),” a senior finance ministry official told the Financial Times.

The government has identified measures leading to cuts totalling about €15bn, but it believes that some of them will not be acceptable to the “troika” of international lenders, the official added.

Amid domestic political concerns, the government has spoken publicly about spending cuts of €11.6bn – the net expenditure savings – while total cuts will actually be higher to compensate for resulting estimated losses in tax revenue and increased social security contributions as a deeper-than-expected recession continues to ravage the country.

Read more: http://liveweb.archive.org/http://www.ft.com/cms/s/0/7bee8452-eba4-11e1-9356-00144feab49a.html

[starroute]

1. The term "death spiral" comes to mind

You cut spending in an attempt to reduce national debt. But the cuts cripple your economy, so you cut more to compensate for the loss of revenue. And that further cripples ...

Lather, rinse, repeat.

Much the same think is happening in the UK, if not on quite such an extreme scale just yet.

[Javaman]

2. bait and switch on the poor and desperate. nt