TIGHTEN THE BELT
The English economy faces this year brutal adjustment, which require all public authorities to tighten their belts to save 18,000 million, 1.75% of gross domestic product (GDP), in addition to the 15,000 million of the emergency measures adopted in May. The aim is to reduce the government deficit of 6%, from 9.3% forecast for 2010. Containment chair all government actions. Funds intended for payments will be made up 15.6%, which rolled back to all departments under the Central Executive to 2006 levels. The actual investment will fall by 38.3%, from 9,390 to 5,793,000, and for infrastructure, 29.6%.
All extravagance, to the last euro, are subject to compliance with the fiscal consolidation plan initiated after the disaster of 2009, when it recorded a deficit of 11.1% of GDP. In 2011 will fall to 6% and 3% by 2013 set by the European Pact for Stability and Growth Pact.
The 2011 is a year of abundance in emerging and advanced weakness. In fact, by 2010 we left behind has been especially hard for the European Union (EU), which has seen several of its member states suffer sovereign debt crisis while the block is struggling to overcome the effects of the global financial crisis. The dramatic situation experienced during 2010, which has not yet completed, has put the euro at its greatest challenge since its creation in 1999. There are many who feel that the EU will take several years to recover completely, while the year ahead will undoubtedly be the cuts.
From the Bank of Spain has seen a slight recovery in spending in the fourth quarter of this year and a moderation in the pace of job losses but insufficient to launch from the rooftops.
consumption appears to resume this new year, a mild recovery path while employment continues to create uncertainty after last November data on the number of members of Social Security fell at a rate of 1.3% yoy.
The consumer confidence rose in October and November compared to the third quarter but this was below the level of the summer months as announced recovery remains slow to exit the crisis.
On the negative side of consumption, the Bank of Spain said car registrations with a fall of 25% in November while the industrial sector highlights a decrease in the order book in recent months. The level of productive capacity utilization experienced a small reduction early in the fourth quarter, up 72.4%, after four straight quarters of increases.
As construction Bank notes that the recent evolution of investment in this sector has been predominantly favorable and highlights the confidence indicator for the business sector, which in November reached its lowest level of the current recessionary cycle.
On the situation in financial markets, the report says the banking supervisory authority in the December elapsed has been some easing of tensions that affected the English financial markets in November, which allowed a recovery stock indices and a slight decline in risk premiums, however, remain at high levels.
As for the financing obtained by households and business, as contained in the report, has continued at an annual rate to nil.
regard to interest rates applied by banks in transactions with their customers, the Bank of Spain said that increased in October, in the case of loans to households for house purchase and in the financing granted to companies (5 basis points and 34 points respectively), reaching 2.71% and 3.46%.
For its part, the deficit of the State has complied with the anticipated reduction until November because sum 38,000 million euros (3.7% of GDP), 47% less than it had in the same period last year, when it rose to over 71,000 million euros (6.8% of GDP).
According to the report, the Bank of Spain considers that the effects of the reduction in public wages in June and increased containment expected in current transfers should help intensify, in the last month of the year, the cumulative decrease expenditure. The European Commission forecast that the block will record an economic growth of 1.7 percent in 2011 and warned of the risk of a fall even more, given the high uncertainties so we will certainly continue tightening their belts in this new year begins.
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