LUXEMBOURG — Europe’s economic picture darkened Monday as Britain’s prime minister declared the nation’s finances to be worse than feared — requiring sacrifices that will affect “our very way of life” — and the euro slid further toward parity with the dollar.
From small EU nations such as Hungary and Greece to big ones such as Germany, which Monday announced its own harsh austerity measures, the continent’s economic and fiscal crisis is showing no sign of letting up.
Germany, Europe’s economic powerhouse, promised a raft of spending cuts, vowing to “set an example” for heavily indebted Greece, Spain and Portugal, which are buckling under debt loads and threaten to drag Europe’s currency union down.
With even an unprecedented multibillion-dollar rescue package failing to fully convince investors, European nations are scrambling to regain credibility and shore up market confidence by proving they can get their houses in order.
There is no doubt the cuts will be painful, and government leaders are preparing their citizens for the blow.
German Chancellor Angela Merkel says Germany needs to save $96 billion through 2014 by reducing handouts to parents, cutting 15,000 government jobs and delaying projects.
British Prime Minister David Cameron warned in a speech of painful cutbacks that may shape the nation for a generation and are necessary because “the overall scale of the problem is even worse than we thought.”
“How we deal with these things will affect our economy, our society — indeed our whole way of life,” he said. “The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades to come.”
Cameron’s government will announce cuts in a June 22 budget, less than two months after coming to power at the head of a Conservative-Liberal Democrat coalition. On Monday, he was vague on details of how his government plans to close its record deficit, at $221.5 billion, or 10.9 percent of economic output in the last fiscal year.
German and British efforts to close their budget deficits — or the yearly gap between government spending and revenue — come after Spain and Portugal were ordered to toughen austerity programs to keep them from needing a bailout like Greece.
Countries tightening their belts
Latest developments on the economic crisis in Europe:
Germany
Will cut welfare benefits, introduce new taxes and shed government jobs to save as much as $96 billion through 2014 and set an example for the rest of Europe, said Chancellor Angela Merkel, left. Government data show that industrial orders in Europe’s biggest economy were up 2.8 percent in April. The figures released by Germany’s Economy Ministry showed foreign and domestic orders contributing equally to the improvement. They increased by 2.8 percent and 2.9 percent respectively. The rise followed a 5.1 percent overall increase in orders in March.
Britain
Prime Minister David Cameron said the nation cannot avoid cutting a deficit that rose to $225 billion in the last fiscal year. He has suggested that welfare programs and expenditures for civil servants are high on the list of possible cuts and confirmed that the capital-gains tax would go up.
The Associated Press
