Selasa, 03 April 2012

Greece and spain lead the news items from europe this morning

12.17pm: Back to Greece where Helena Smith says the Panhellenic Seamen's Union's bombshell announcement of more strikes next week – just when the austerity-weary nation is gearing up for Orthodox Easter on the 15th -- is causing waves (ahem):
Helena writes:
With the Greek government describing the strike as "catastrophic for the economy," officials were this morning scrambling to resume talks with the Union, the PNO. Development Minister Anna Diamantopoulou, who succeeded in getting the seamen to call off strike action last month, was said to be "totally taken aback" by the surprise move.
The union is up in arms over pension cuts and the abolition of collective bargaining agreements and rules that require ships flying foreign flags to employ local seamen when operating in Greek waters. Officials said the walk-out will wreak havoc on the tourism and agricultural sectors, where farmers unable to transport produce stand to suffer huge losses.
"We agreed in writing two weeks ago that there would be no further action," one insider insisted. "And from what we understand the [union's] decision was reached by a majority vote of two. If every sector pressed for demands like this there's no way Greece will ever pay its debts and get out of the mess it is in."
The strike will see all ferry services islands in the Aegean and Ionian seas being cut Tuesday and Wednesday which is exactly when Greeks (and tourists) are expected to begin returning to ancestral homes to celebrate Easter, the most important holiday in the Orthodox calendar. Authorities on popular destinations in the Cyclades isles reacted with outrage today with local mayors accusing the seamen of holding island Greece "hostage."
"It's catastrophic for the islands. Just when the market is expecting to move around Easter they announce a strike which will bring local businesses to their knees. I hope logic will prevail," said Syros' mayor Yiannis Dekavalas.

1.19pm: There have been important developments in Spain today, where budget minister Cristobal Montoro has presented his full budget.
The event saw Montoro provide more details of the massive €27bn adjustment that was announced on Friday.
Giles Tremlett, our man in Madrid, has the details:
The most curious, and unpredictable, element of the budget is a tax amnesty. Montoro hopes this will make some €25bn of hidden money (i.e. almost equivalent to the entire deficit adjustment) appear from Spanish mattresses, socks, offshore acounts and wherever else those who hide their 500 euro notes from señor or señora tax collector keep them.
The funds turned up by this amnesty will be taxed at 10%, so the tax is market down to raise €2.5bn -- or a tenth of the total package.
Much will depend on how this scheme works. If Mr Montoro does not collect the cash, he will have to find it elsewhere. On the other hand, if he manages to bring in more, he will have a cushion against future surprises - including the impact of the government's spending cuts on the economy as a whole (especially tax revenue) or a failure by the regional governments to cut their part of deficit. The latter are responsible for a further adjustment of some €15bn – so a considerable part of the work of meeting Spain's deficit target fall to them. They are the direct providers of health and eduction, so their cuts will hurt Spaniards directly. Last year they failed to cut their joint deficit at all - angering Brussels, raising market worries and helping force this year's ferocious budget.
The Spanish situation appears to be key to the future of the eurozone. Europe's firewall is still not large enough to take on the borrowing needs of both Spain and Italy – so the crisis could flare up again if Mariano Rajoy's government falters.

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