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| Version 1 | Version 2 |
|---|---|
| European commission country scorecards | European commission country scorecards |
| (35 minutes later) | |
| Spain | Spain |
| The European commission has given Spain an extra year to carry out one of the harshest deficit cuts seen in Europe and has offered the country a European rescue of its ailing banks. | The European commission has given Spain an extra year to carry out one of the harshest deficit cuts seen in Europe and has offered the country a European rescue of its ailing banks. |
| Mariano Rajoy's conservative, reforming People's party government received a mix of glowing words, stern orders to continue reform and warnings about further trouble ahead as the economy slumps. | Mariano Rajoy's conservative, reforming People's party government received a mix of glowing words, stern orders to continue reform and warnings about further trouble ahead as the economy slumps. |
| Encouraging words about Spain's restructuring of its financial sector came with a warning that it will face further pressure as recession drags on and joblessness looks set to rise from 24%. | Encouraging words about Spain's restructuring of its financial sector came with a warning that it will face further pressure as recession drags on and joblessness looks set to rise from 24%. |
| The commission's report said: "The worsening of the macroeconomic outlook might require an increase in provisions, which would have an impact on the profitability of the banking system. In addition, given the risk of bank-funding stress, further strengthening of the capital base of banks may be required." | The commission's report said: "The worsening of the macroeconomic outlook might require an increase in provisions, which would have an impact on the profitability of the banking system. In addition, given the risk of bank-funding stress, further strengthening of the capital base of banks may be required." |
| Spain's banks have already been ordered over the past three months to set aside €82bn euros against toxic real estate. A further effort would probably see more of them forced to seek help. | Spain's banks have already been ordered over the past three months to set aside €82bn euros against toxic real estate. A further effort would probably see more of them forced to seek help. |
| Madrid was rapped over the knuckles on taxes, with the commission wanting fewer direct tax hikes and more indirect taxes. Higher sales tax now seems inevitable. | Madrid was rapped over the knuckles on taxes, with the commission wanting fewer direct tax hikes and more indirect taxes. Higher sales tax now seems inevitable. |
| "Direct tax increases lead to a higher tax burden on labour and capital, which is considered to be particularly detrimental for growth," it said. "Other tax increases which are considered to be less detrimental for growth, i.e. further increases in indirect taxation, have been explicitly excluded by the government." | "Direct tax increases lead to a higher tax burden on labour and capital, which is considered to be particularly detrimental for growth," it said. "Other tax increases which are considered to be less detrimental for growth, i.e. further increases in indirect taxation, have been explicitly excluded by the government." |
| Spain was praised for raising retirement ages, but was told poor growth neutralises part of its pension reform, leaving the pension system in long-term danger. | Spain was praised for raising retirement ages, but was told poor growth neutralises part of its pension reform, leaving the pension system in long-term danger. |
| "The worsening of Spain's economic outlook is limiting the impact of the reforms," the report said. "Indeed, Spain appears now to be at medium risk with regard to the sustainability of public finances in the long-term." | "The worsening of Spain's economic outlook is limiting the impact of the reforms," the report said. "Indeed, Spain appears now to be at medium risk with regard to the sustainability of public finances in the long-term." |
| Reaction: The extended deficit-cutting deadline should have caused joy in Madrid, but there was no let up in the suffering of the eurozone's fourth biggest economy, where borrowing costs continued to creep up towards bailout levels, with the news from Brussels providing only brief respite. | Reaction: The extended deficit-cutting deadline should have caused joy in Madrid, but there was no let up in the suffering of the eurozone's fourth biggest economy, where borrowing costs continued to creep up towards bailout levels, with the news from Brussels providing only brief respite. |
| The proposal that Europe's ESM bailout fund be used to aid banks directly provided a potential lifeline to Rajoy's government as rumours grew that Spanish banks would need another round of recapitalisation. | The proposal that Europe's ESM bailout fund be used to aid banks directly provided a potential lifeline to Rajoy's government as rumours grew that Spanish banks would need another round of recapitalisation. |
| Stock market verdict: Madrid IBEX index: -2.6% at 6090.4 | Stock market verdict: Madrid IBEX index: -2.6% at 6090.4 |
| Greece | Greece |
| After a near 7% contraction in GDP last year, the people of Greece are not expected to to have a better time in 2012. On almost every measure, from public administration to the size of its hidden economy, Athens is at the bottom of the EU table. The silver lining, says Brussels, is the way government spending and business subsidies have been cut to the bone over the last two years. Now it must press ahead with structural reforms. | After a near 7% contraction in GDP last year, the people of Greece are not expected to to have a better time in 2012. On almost every measure, from public administration to the size of its hidden economy, Athens is at the bottom of the EU table. The silver lining, says Brussels, is the way government spending and business subsidies have been cut to the bone over the last two years. Now it must press ahead with structural reforms. |
| Reaction: An election next month could back the EU's austerity plans on the promise of further bailout funds. | Reaction: An election next month could back the EU's austerity plans on the promise of further bailout funds. |
| Stock market verdict: The FTSE Athex 20 finished down 3.7% at 185,51. | Stock market verdict: The FTSE Athex 20 finished down 3.7% at 185,51. |
| France | France |
| The EC praised the cuts in state spending, but warns that France will take a long time to hit the EU's 3% annual deficit target. Welfare spending and gold-plated pensions are on the list of issues needing more attention. To generate jobs and growth it must end restrictive labour practices and protections that limit firms' ability to hire and fire. Growth next year of just 1.3% after 0.5% this year. | The EC praised the cuts in state spending, but warns that France will take a long time to hit the EU's 3% annual deficit target. Welfare spending and gold-plated pensions are on the list of issues needing more attention. To generate jobs and growth it must end restrictive labour practices and protections that limit firms' ability to hire and fire. Growth next year of just 1.3% after 0.5% this year. |
| Reaction: A socialist president will struggle to implement labour reforms while cutting welfare spending. Paris needs to tackle youth unemployment, which will mean watering down protection for older workers. | Reaction: A socialist president will struggle to implement labour reforms while cutting welfare spending. Paris needs to tackle youth unemployment, which will mean watering down protection for older workers. |
| Stock market verdict: The CAC 40 was down 2.2% at 3015. | Stock market verdict: The CAC 40 was down 2.2% at 3015. |
| Ireland | Ireland |
| Brussels puts a positive gloss on every dire figure coming out of Ireland's economy. Officials say it has made "important progress" despite being in recession and only keeping itself afloat with exports of food, pharmaceuticals and chemicals. It is expected to benefit from a surge in EU structural funds as it runs out of money to support its own infrastructure spending and prevent more young people leaving. | Brussels puts a positive gloss on every dire figure coming out of Ireland's economy. Officials say it has made "important progress" despite being in recession and only keeping itself afloat with exports of food, pharmaceuticals and chemicals. It is expected to benefit from a surge in EU structural funds as it runs out of money to support its own infrastructure spending and prevent more young people leaving. |
| Reaction: The referendum on Thursday is expected to reluctantly back austerity on the promise of further EU funds. Ireland will probably need a second bailout. | Reaction: The referendum on Thursday is expected to reluctantly back austerity on the promise of further EU funds. Ireland will probably need a second bailout. |
| Stock market verdict: Down 1.3% at 3,103 | Stock market verdict: Down 1.3% at 3,103 |
| Portugal | Portugal |
| Prime minister Pedro Passos Coelho must cope with an economy that is predicted to contract by 3.3% this year and an unemployment rate that is set to rise from the current 15%. Next year is expected to be a little better, though Lisbon is failing to tackle labour market restrictions and the huge costs and administrative barriers of starting a business. But plans to limit youth unemployment (34%) are praised. | Prime minister Pedro Passos Coelho must cope with an economy that is predicted to contract by 3.3% this year and an unemployment rate that is set to rise from the current 15%. Next year is expected to be a little better, though Lisbon is failing to tackle labour market restrictions and the huge costs and administrative barriers of starting a business. But plans to limit youth unemployment (34%) are praised. |
| Reaction: The economy is tanking and jobs are hard to come by, but voters are relying on cash from Brussels to bail them out. | Reaction: The economy is tanking and jobs are hard to come by, but voters are relying on cash from Brussels to bail them out. |
| Stock market verdict: -1% at 4,518 | Stock market verdict: -1% at 4,518 |
| Italy | Italy |
| The commission says unemployment is set to rise and recession will last at least 18 months until the end of 2012. Rome is tackling civil-service inefficiency, encouraging competition in protected markets and levying a wealth tax. Brussels also praises Mario Monti for a spending clampdown that has restricted the country's debt to 120% of GDP. | The commission says unemployment is set to rise and recession will last at least 18 months until the end of 2012. Rome is tackling civil-service inefficiency, encouraging competition in protected markets and levying a wealth tax. Brussels also praises Mario Monti for a spending clampdown that has restricted the country's debt to 120% of GDP. |
| Reaction: The Italian government will be pleased at the praise for its wide-ranging reform agenda, but no growth and higher unemployment will make it tough to push through reforms. | Reaction: The Italian government will be pleased at the praise for its wide-ranging reform agenda, but no growth and higher unemployment will make it tough to push through reforms. |
| Stock market verdict: FTSE Italia All-Share: -1.8% to 13,813. | Stock market verdict: FTSE Italia All-Share: -1.8% to 13,813. |
| United Kingdom | United Kingdom |
| UK economic activity is expected "to remain subdued with growth of 0.5% this year before regaining momentum in 2013", though at only 1.7% it will be weaker than the 2% projected by the independent Office for Budget Responsibility. The commission praised government spending cuts, but raised concerns about a shortage of affordable childcare; the boom-bust housing market; and the risk that spending cuts will conflict with the need to rebuild Britain's crumbling infrastructure. | UK economic activity is expected "to remain subdued with growth of 0.5% this year before regaining momentum in 2013", though at only 1.7% it will be weaker than the 2% projected by the independent Office for Budget Responsibility. The commission praised government spending cuts, but raised concerns about a shortage of affordable childcare; the boom-bust housing market; and the risk that spending cuts will conflict with the need to rebuild Britain's crumbling infrastructure. |
| Reaction: Delays on some spending cuts and predictions of growth next year are likely to keep protests at bay but unemployment will stay high. | Reaction: Delays on some spending cuts and predictions of growth next year are likely to keep protests at bay but unemployment will stay high. |
| Stock market verdict: FTSE 100 finished down 1.7% at 5297 | Stock market verdict: FTSE 100 finished down 1.7% at 5297 |