Seeking to boost confidence, deeply troubled Ireland this week announced $4 billion in cuts that will mean broad reductions in state payments to the unemployed and the disabled as well as in government salaries.
…Greece's new Socialist government promised to outline emergency cuts next week. The prospect … raised the specter that Greece's economy could take longer to recover while heightening fears of civil unrest.
The Socialist government came to power in October vowing to protect state salaries and public spending, "but now it's going to have to do the opposite -- they need to bring down spending," said David Riley, head of global sovereign ratings at Fitch. "This is part of the credibility problem they face -- they will say they are going to tackle the budget, but will they really be able to do it?"
…no nation is under as much scrutiny as Greece.
The new government there shocked investors by revealing that its predecessors had dramatically underestimated the nation's financial problems. Revised data showed its budget deficit stood at 12.7 percent of national income -- double earlier figures -- and that its economy, rather than growing, had been in recession for more than a year.