By PDPRE payday loans uk
As UK citizens head off to vote today Greek politics serve as a timely reminder of what's it store for Britain once the general election is over.
Unable to reassure tumbling world markets with his first batch of austerity measures Giorgos Papaconstantinou, Greece's Finance Minister has outlined a new austerity package.
The measures, imposed by IMF, European Union ministers in return for cash to prop up its ailing public finances will be reassessed every three months until they reduce Government spending to below 3 percent of Gross Domestic Product (currently 13.6%).
Effectively controlled by German and the US officials within the EU and IMF, Giorgos Papaconstantinou has already announced "deep spending cuts for civil servants and tax increases." Papaconstantinou also made it clear that the new austerity measures will also be imposed on "parliamentarians and the Parliament's staff." Looking at the measures as a whole, however, it is clear that the German and US compulsory plan will run far deeper and wider than expected and will affect everyone.
On taxation Greece faces further rises in VAT from 21% to 23% a 10% hike on tobacco, alcohol and fuel taxes, there is also a a 10% rise in the tax of luxury goods and a "crisis levy" on business profits and more property taxes.
Public sector wages for those earning over €3000 per month will be reduced by €1000 per annum with benefits for public sector workers also cut by 8% with even the lowest paid "Deko" public servants facing cuts in wages of 3%. Pensions are also being slashed by €800 per annum that will be capped at €2500.00.
The prospect of the EU and US imposed spending cuts in Greece that has caused riots on the streets of Athens yesterday, is not expected to be repeated in London, however, deficit reduction in the UK public sector will hurt and according to the the UK's three leading political parties, inevitable.
The public sector spending represents 60% of the total economy (GDP) with total Government debt of 952bn, or nearly 70% our Gross Domestic Product. With more spent on debt interest than on schools all parties agree that public borrowing cannot be sustained at these levels, they differ, however, in where and when they will make the cuts.
Labour is committed to halve the public sector deficit (the amount it spends less what it receives in tax) over the next four years, but are sticking to their spending plans this year as they believe this will help the economy recover. Next year, however, "spending will be tighter".
Labour say they will find part of the money from efficiency savings and streamlining Government (26bn) capping public sector pay rises by 1% until 2013 (3.4bn) and from public sector pensions (1bn). A further 5bn will be found from “low priority” public spending and welfare reform (1.5bn).
Labour also plans to reduce the 952bn national debt (currently 69% of GDP) by selling Government assets of £20 billion by 2020.
Labour also plan to tax bank bonuses, reduce pension reliefs for the better off and introduce a new 50% rate of tax for those earning over £150,000 per annum as well as the controversial penny on National Insurance referred to by the Conservative Party and backed by big business as a "Tax on Jobs".
The Liberal Democrats have identified £15bn of annual savings in Government spending by scrapping tax credits from higher earners, ending payments into Children's Trust Funds and scrapping ID cards and biometric passports. The party also plans to reduce the deficit by capping public sector pay rises to £400.00 for two years, scaling back "HomeBuy" schemes, reforming public sector pensions and prisons, through reducing short sentencing, and introducing levy on the banks.
Putting clear blue water between themselves, Labour and the Conservatives the Liberal Democrats will deregulate local authorities, review defence spending and scrap the like for like replacement for Britain's Trident nuclear weapons and cancelling the new Eurofighter.
The Liberal Democrats Detailed spending and taxation plans can be found in p.96 of manifesto
The Conservative's too believe that an annual budget deficit at 11% of GDP is unsustainable, but unlike Labour and the Liberal Democrats want to act this year not next. If the Conservatives are elected today within 50 days they will have an emergency budget that in which they will set out plans to "eliminate the bulk of the structural deficit over the first parliament".
The Conservatives have identified 6bn of savings from waste, though does not say in their manifesto where these saving will come from. In addition, further savings will be made by freezing public sector pay of all but the lowest paid and scrap tax credits for those earning £50,000 or more and review the age at which people can retire to 66. The Conservatives will also cut cap public sector pensions at £50,000 and contributions to the Child Trust Fund, but unlike the Liberal Democrats will exempt the poorest and disabled children from the reduction.
The conservative want to reduce the size of Government by cutting MP's by 10%, cutting 3bn from the Whitehall budgets, cut Minister's pay by 5% and freeze MP's salary for the whole parliament.
Irrespective of the outcome of the general election all political parties understand the need cut public spending to bring Britain’s public finances back into balance. Unlike the Greeks, however, the UK will not have a gun held to its head by IMF and EU Finance ministers to ensure spending is cut the bone and thankfully will avoid the kind of economic chaos that triggered the Athen's riots.