As UK citizens head off to vote today Greek politics serve as a timely reminder of what's it store for Britain once the general election is over.
Unable to reassure tumbling world markets with his first batch of austerity measures Giorgos Papaconstantinou, Greece's Finance Minister has outlined a new austerity package.
The measures, imposed by IMF, European Union ministers in return for cash to prop up its ailing public finances will be reassessed every three months until they reduce Government spending to below 3 percent of Gross Domestic Product (currently 13.6%).
Effectively controlled by German and the US officials within the EU and IMF, Giorgos Papaconstantinou has already announced "deep spending cuts for civil servants and tax increases." Papaconstantinou also made it clear that the new austerity measures will also be imposed on "parliamentarians and the Parliament's staff." Looking at the measures as a whole, however, it is clear that the German and US compulsory plan will run far deeper and wider than expected and will affect everyone.
On taxation Greece faces further rises in VAT from 21% to 23% a 10% hike on tobacco, alcohol and fuel taxes, there is also a a 10% rise in the tax of luxury goods and a "crisis levy" on business profits and more property taxes.
Public sector wages for those earning over €3000 per month will be reduced by €1000 per annum with benefits for public sector workers also cut by 8% with even the lowest paid "Deko" public servants facing cuts in wages of 3%. Pensions are also being slashed by €800 per annum that will be capped at €2500.00.
The prospect of the EU and US imposed spending cuts in Greece that has caused riots on the streets of Athens yesterday, is not expected to be repeated in London, however, deficit reduction in the UK public sector will hurt and according to the the UK's three leading political parties, inevitable.
The public sector spending represents 60% of the total economy (GDP) with total Government debt of 952bn, or nearly 70% our Gross Domestic Product. With more spent on debt interest than on schools all parties agree that public borrowing cannot be sustained at these levels, they differ, however, in where and when they will make the cuts.
Labour is committed to halve the public sector deficit (the amount it spends less what it receives in tax) over the next four years, but are sticking to their spending plans this year as they believe this will help the economy recover. Next year, however, "spending will be tighter".
Labour say they will find part of the money from efficiency savings and streamlining Government (26bn) capping public sector pay rises by 1% until 2013 (3.4bn) and from public sector pensions (1bn). A further 5bn will be found from “low priority” public spending and welfare reform (1.5bn).
Labour also plans to reduce the 952bn national debt (currently 69% of GDP) by selling Government assets of £20 billion by 2020.
Labour also plan to tax bank bonuses, reduce pension reliefs for the better off and introduce a new 50% rate of tax for those earning over £150,000 per annum as well as the controversial penny on National Insurance referred to by the Conservative Party and backed by big business as a "Tax on Jobs".
The Liberal Democrats have identified £15bn of annual savings in Government spending by scrapping tax credits from higher earners, ending payments into Children's Trust Funds and scrapping ID cards and biometric passports. The party also plans to reduce the deficit by capping public sector pay rises to £400.00 for two years, scaling back "HomeBuy" schemes, reforming public sector pensions and prisons, through reducing short sentencing, and introducing levy on the banks.
Putting clear blue water between themselves, Labour and the Conservatives the Liberal Democrats will deregulate local authorities, review defence spending and scrap the like for like replacement for Britain's Trident nuclear weapons and cancelling the new Eurofighter.
The Liberal Democrats Detailed spending and taxation plans can be found in p.96 of manifesto
The Conservative's too believe that an annual budget deficit at 11% of GDP is unsustainable, but unlike Labour and the Liberal Democrats want to act this year not next. If the Conservatives are elected today within 50 days they will have an emergency budget that in which they will set out plans to "eliminate the bulk of the structural deficit over the first parliament".
The Conservatives have identified 6bn of savings from waste, though does not say in their manifesto where these saving will come from. In addition, further savings will be made by freezing public sector pay of all but the lowest paid and scrap tax credits for those earning £50,000 or more and review the age at which people can retire to 66. The Conservatives will also cut cap public sector pensions at £50,000 and contributions to the Child Trust Fund, but unlike the Liberal Democrats will exempt the poorest and disabled children from the reduction.
The conservative want to reduce the size of Government by cutting MP's by 10%, cutting 3bn from the Whitehall budgets, cut Minister's pay by 5% and freeze MP's salary for the whole parliament.
Irrespective of the outcome of the general election all political parties understand the need cut public spending to bring Britain’s public finances back into balance. Unlike the Greeks, however, the UK will not have a gun held to its head by IMF and EU Finance ministers to ensure spending is cut the bone and thankfully will avoid the kind of economic chaos that triggered the Athen's riots.
Mark Thompson the director general of the BBC has today defended the state-owned broadcaster’s decision to maintain impartiality and give BNP leader, Nick Griffin, a platform on tonight’s controversial Question Time.
Griffin, who is also a member of the European Parliament, landed himself in trouble earlier this week when he used a World War II spitfire to promote his far-right party, will have an opportunity to clarify his views on race relations, the level of unemployment the war in Afghanistan and whether or not Britain should remain part of the European Union.
In an e-mail to his supporters Griffin said:
Fellow British Patriot,
Question Time is scheduled for 10.35pm TONIGHT on BBC 1 and will be a milestone in the indomitable march of the British National Party towards saving our country.
Our violent opponents on the far Left have promised to lay siege and barricade the studio venue, because they know only too well that this could be THE key moment that propels the BNP into the big time.
Never before have we had the chance to present our patriotic, common sense solutions to Britain's nightmare situation to the public at large in such a prominent fashion. However, members and supporters must be aware that this show will be a stage-managed farce organised in a specific way to leave several impressions: The audience will be hand-picked and overtly hostile - thus giving the impression that the British people at large must be hostile to BNP views. The panellists will be overtly hostile, even the non-political guests will be hostile. Everyone will be hostile - this will leave the impression to non-informed viewers that BNP views have minority status.
I will, no doubt, be interrupted, shouted down, slandered, put on the spot, and subject to a scrutiny that would be a thousand times more intense than anything directed at other panellists.
It will, in other words, be political blood sport. But I am relishing this opportunity, and I know that, despite the stage-managed hostile audience and panellists, YOU, the ordinary members, supporters and voters of the BNP, will be in the studio with me as I take on the corrupt, treacherous swine destroying our beautiful island nation.
Yours sincerely for Britannia.
Nick Griffin MEP
The decision to invite the BNP leader to the Question Time panel is unpopular at Government level with Welsh Secretary Peter Hain calling for the BBC’s invitation to be withdrawn. The Prime Minister, however, Gordon Brown speaking to the Real Radio Yorkshire this morning said:
"If on Question Time, they are asked about their racist and bigoted views that are damaging to good community relations, it will be a good opportunity to expose what they are about. At every point, I believe we have got a duty to expose the BNP for what are racist and sectarian politics. Anybody who listens to what they are really about will find that what they are saying is unacceptable. In a recession, people are tempted to vote against their traditional voting patterns like voting Labour, which we regret. But I want to persuade people that voting for the BNP is not the right thing to do."
With UK youth unemployment topping a million and five hundred more young soldiers being sent to Afghanistan to fight the Taliban the programme promises a political bloodbath not to be missed.
The panel also include Justice Secretary Jack Straw; Deputy Chairman of the British Museum's Board of Trustees, and playwright Bonnie Greer.
Before tuning in have your say on the studentguardian poll where we ask should the BBC have invited the leader of the British National Party to appear on Question Time?
The International Monetary Fund has agreed to offload $13 billion dollars worth of gold from its reserves to sort out its own finances and provide loans to the poor.
Washington sources have said that the Fund’s board, which is dominated by US and West European countries, has approved the 403.3 metric tonne gold sale to lend to countries affected by the world economic downturn.
"I am delighted that the executive board has given its overwhelming backing to a strictly limited sale of fund gold to put the financing of the IMF on a sound long-term footing, and enable us to step up much-needed concessional lending to the poorest countries," IMF Managing Director Dominique Strauss-Kahn said.
Investors may be relieved to note that the gold sales will be conducted in such a way as not to disrupt the bullion market, the metal being sold directly to central banks, and the market over a longer period of time.
At todays price of £1013.00 dollars an oz (up $3) the IMF still retains about £104 billion in gold reserves.
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The new dictate filtering out of the EU could mean that the partly public owned banks could be broken-up so that other smaller banks throughout Europe are not disadvantaged.
The news comes ahead of the state banks August interims that analysts expect will reveal that rising unemployment has added to bad debts and mortgage arrears hitting profits, although there is some optimism that RBS in particular may report a small profit due to recovery in its global business.
Banking analyst Sandy Chen, at Panmure Gordon, has estimated that Lloyds may have to write off £50bn of loans over two years, £24bn this year and £23.5bn in 2010, largely as a result of the takeover of HBOS.
To appease the EU Sandy Chen, also expects Lloyds and RBS to sell off core and non-core assets that and following Lloyds decision to shut down their 164 Cheltenham & Gloucester branches will slash Lloyds 3000 branches by 20%.
The EU has also put a question mark over Lloyds insurance business Clerical Medical and their fund manager Insight which could also be on the chopping block. Following the EU directive, RBS, who are aready reducing their Asia business, may also have to scale-back its continental operations.
The EU is expected to announce the detail of the new rules shortly which are thought to allow the UK’s state owned banks five years to complete their structuring by which time many of are likley to be firmly back in the private sector.
Lloyds shares are currently down 2.6% at 71.5p and RBS are steady at 39.75.