Strike in Greece deepens debt fears
Source: Agencies |
February 5, 2010, Friday
|
Print Edition
Print Edition
STOCK markets sank yesterday in Greece, Portugal and Spain amid worries over the European Union's debt woes, with Greek customs and tax officials walking off the job in opposition to cutbacks aimed at digging the government out of a budget crisis that has shaken the entire EU.
The 48-hour Greek customs strike is expected to choke imports until next week, with fuel supplies the most likely to suffer. Lines of trucks were already forming at the country's borders, with customs workers allowing through only those carrying perishable goods or pharmaceuticals.
Prime Minister George Papandreou's government is under pressure from markets and other EU governments to bring its budget deficit down from 12.7 percent of economic output last year to 2 percent in 2013.
A Greek default would be a serious blow to the shared euro currency, but Greece and the EU have insisted that will not happen. Doubts about Greece's finances have also affected market sentiment toward the debt of Portugal and Spain, two other eurozone countries struggling with deficits.
Markets in the region appear worried that political resistance to cutbacks will keep Greece and Portugal from sticking to their plans.
In Portugal, the minority Socialist government is facing an uphill fight against opposition parties which want to hike some areas of spending. All opposition parties are pushing for an increase in the amount provided to poorer regions of the country. Together they can out-vote the government in today's session.
The minister for parliamentary affairs, Jorge Lacao, warned of "serious political consequences" if Parliament passes the opposition proposal.
"This obviously raises a problem of governability at a time when it is absolutely indispensable for the state to show it is committed to imposing discipline on public finances," Lacao said.
Share prices on the Lisbon Stock Exchange sank by more than 4 percent, driven down by concerns about the national debt and political resistance to government efforts to get its deficit under control.
The Spanish finance minister dismissed worries that Spain's debt and other economic problems pose a Greek-style risk for the eurozone. Elena Salgado criticized EU Economy Commissioner Joaquin Almunia for having said Spain and Portugal have problems similar to Greece.
The 48-hour Greek customs strike is expected to choke imports until next week, with fuel supplies the most likely to suffer. Lines of trucks were already forming at the country's borders, with customs workers allowing through only those carrying perishable goods or pharmaceuticals.
Prime Minister George Papandreou's government is under pressure from markets and other EU governments to bring its budget deficit down from 12.7 percent of economic output last year to 2 percent in 2013.
A Greek default would be a serious blow to the shared euro currency, but Greece and the EU have insisted that will not happen. Doubts about Greece's finances have also affected market sentiment toward the debt of Portugal and Spain, two other eurozone countries struggling with deficits.
Markets in the region appear worried that political resistance to cutbacks will keep Greece and Portugal from sticking to their plans.
In Portugal, the minority Socialist government is facing an uphill fight against opposition parties which want to hike some areas of spending. All opposition parties are pushing for an increase in the amount provided to poorer regions of the country. Together they can out-vote the government in today's session.
The minister for parliamentary affairs, Jorge Lacao, warned of "serious political consequences" if Parliament passes the opposition proposal.
"This obviously raises a problem of governability at a time when it is absolutely indispensable for the state to show it is committed to imposing discipline on public finances," Lacao said.
Share prices on the Lisbon Stock Exchange sank by more than 4 percent, driven down by concerns about the national debt and political resistance to government efforts to get its deficit under control.
The Spanish finance minister dismissed worries that Spain's debt and other economic problems pose a Greek-style risk for the eurozone. Elena Salgado criticized EU Economy Commissioner Joaquin Almunia for having said Spain and Portugal have problems similar to Greece.
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