It doesn’t seem to matter whether you are in the Euro or not, we are all going to feel the pain of the economic downturn over the next few years.
The internal strife within Greece after being forced to follow their own austerity path is now well known. Now it is the turn of countries such as Germany Spain and yes, the UK.
The UK has had a breathing space during the run up to the general election and after whilst the government was morphed together. But now that period has ended. There may be laughter at the press conferences in the garden behind Number Ten but that will soon stop. Unlike previous new governments this one will not be given a lengthy honeymoon period. It will also come under intense press scrutiny to identify and exploit (and where possible create?) even the smallest of disagreements or cracks in the coalition.
But while the UK ponders raising the tax band to Â£10,000, Germany is facing the largest austerity package since WWII. As a result of the huge “Shock and Awe” Eurozone rescue package it brokered and joined, the Germans face years of their own pain. Tax cuts that Angela Merkel promised last August have now been consigned to the dustbin. In fact tax hikes are now being considered. Inflation is also expected to eat into wages and pensions. As their local authority budgets are slashed many Germans are now beginning to see their unfilled potholes and reduced service as a punishment transferred to them for Greek profligacy.
In Spain the Premier, Jose Luis Zapatero has announced that there will be a 5% cut in public sector pay. Mr Zapatero’s own wages will be reduced by about 15%. Money for the regions is to be cut, pension increases stopped and their baby bonus of â‚¬2,500 will be cancelled. This is on top of their own property crash and 20% unemployment.