France - unveiled €20bn worth of tax
breaks over three years, which will allow companies to cut
labour costs, in a bid to restore the competitiveness of the country's
declining industry. The cuts come after a report, commissioned by the Socialist
government reported and carried out by French industrialist Louis Gallois,
yesterday called on Francois Hollande to undertake "shock therapy" to stop the
national rot, with drastic cuts in business payroll taxes to claw back loss
ground against Germany and other EMU states. French Prime Minister Jean-Marc
Ayrault said the reduction would take the form of tax credits, instead of a cut
to employer wage taxes as recommended in Gallois' report . The cuts will be
split as follows:
• €10bn in spending cuts
• €10bn increase in value added tax (VAT) and green taxes.
The standard VAT rate will rise from 19.6pc to 20 pc. There will also be a
three-percentage point increase in tax on restaurants. "France must recover its
ranking - its ranking of a grand industrial power," Ayrault said. The measures
announced by the state "should allow France to avoid the decline that stalks
us," he said.
Two-days of general strikes began in
Greece , with state hospital doctors, taxi drivers, transport
workers and journalists walking off the job, as they protest against the
government's austerity budget. The budget was delivered to parliament late last
night and is due to be voted on tomorrow. The budget includes a package of
€13.5bn (£10.8bn) in cost cuts and tax hikes along with measures making it
easier for firms to hire and fire workers. Approval of the reforms and the
passage of the 2013 budget are crucial to unlocking €31.5 bn in aid from an
International Monetary Fund and European Union bailout that has been on hold
since the summer.
2 comments:
Mario Draghi, the European Central Bank’s president, warned that Germany is no longer insulated from the slump in southern Europe. "The latest data suggest that these developments are now starting to affect the German economy," he said, triggering an immediate sell-off on Europe’s bourses and pushing the euro down to almost $1.27 against the dollar.
Germany’s industrial output dropped 1.8pc in September and orders fell 3.3pc, far worse than expected. Spanish industrial output fell 7pc. Annalisa Piazza from Newedge said it was a shocking upset and implies that Germany may be in recession already.
Flight to safety pushed down yields on two-year German debt to -0.06pc, nearing the all-time low seen during the last eurozone debt spasm in July. Yields on 10-year US Treasuries fell 11 basis points to 1.63pc.
The jitters came as American voters delivere split government yet again, with the Republicans still in charge of the House of Representatives and the Democrats still shy of a 60-seat super-majority in the Senate.
Alan Greenspan, ex-chairman of the US Federal Reserve, said it is unclear whether President Barack Obama can reach a deal with Congress to head off the "fiscal cliff" in the few working days before recess in mid December. Unless the two sides agree there will be automatic tax rises and spending cuts worth $600bn or 4pc GDP at the end of the year.
Conservative and socialist lawmakers from Greece's three-party coalition government voted to adopt the €18.5bn budget cuts by 2016 despite protests earlier in the day by more than 70.000 people who massed outside the parliament.
Violent protesters threw fire bombs and rocks at police, who responded with stun grenades, tear gas and the first use of water cannon in Greece in years.
Inside the building, lawmakers interrupted the debate as Parliament employees went on strike to protest wage cuts.
According to Athanassios Nakos, second deputy speaker of the parliament, 153 out of 299 lawmakers voted in favour of the bill that includes spending cuts and reforms to be implemented by 2016, while 128 voted against.
Greece's fragile coalition government faces its toughest test yet when lawmakers vote on new austerity measures needed to avoid bankruptcy.
Post a Comment