New Age of Austerity

Europe has entered new age of austerity.

And its momentous impact are being felt in massive social upheaval across the European continent.

In Spain,public sector workers upset by five percent pay cut and freeze Tuesday are staging mass protests,mobilized by Spain's biggest trade unions, in Madrid.

In Germany,Chancellor Angela Merkel announced tough budget cuts - the biggest since World War II - to squeeze 86 billion euros in savings by 2014.

Mrs. Merkel stated the planned savings would come from 10,000 public sector jobs cut,special parental unemployment aid reduction,armed forces spending cuts and abolition of energy subsidies.

In the United Kingdom,Britain's Prime Minister David Cameron also warned austerity steps are afoot to control the ballooning national debt of US$1.12 billion and huge British 156 billion pound deficit that is way above 11 percent of the Gross Domestic Product(GDP).

He sounded sober note that "Labour's legacy" and Britain's dire financial situation were "even worse than we thought".

Chancellor of the Exhequer George Osborne is set to announced emergency budget June 22 that will affect the British economy,society and way of life.

These grave austerity steps are being planned in two of Europe's strongest economies as European finance ministers huddled in Luxembourg to set up the May 10 750 billion euros rescue package.

They met amid global stock and currency market jitters that sent the Euro to below 1.2 - briefly to 1.188 before rebounding to 1.196 against the US dollar - the lowest level in four years Monday.

As they iron out proposal for early European Union(EU) scrutiny of national budget plans to prevent Greek-style crisis,they express support for sanctions against errant nations that ignore warnings to balance national debts.

Herman van Rompuy,European Council President,stated the proposed sanctions would be slapped on countries in the Eurozone that do not take appropriate measures in future.

Meanwhile,in Hungary,which saw its currency,Forint falling six percent against the US dollar last week,Gyorgy Matocsy,its economy minister,stressed that "Hungary is not Greece" in a bid to pacify fears after gaffe by Viktor Orban,Hungary's Prime Minister.

In an emergency meeting,the Eastern European country,which had in 2008 got IMF and EU bailout of US$25 billion,reassured markets that steps would be taken to control Hungary's budget deficit with public spending cuts.

Dominique Strauss Kahn,the managing director of the International Monetary Fund(IMF) described the new European Financial Stability Facility being set up by the EU finance ministers is very vital for "stabilization of the euro zone".

The new fund set up under Luxembourg law,will be a separate entity based in Luxembourg with the 16 eurozone governments as shareholders.

It will market debts guaranteed by governments and use the money raised to help countries, like Greece that comply with strict budgetary conditions as demanded by Germany,in need with loans.

To stop the spread of the Greek sovereign debt crisis,the European governments are taking drastic steps to cut bloated bureaucracies and chop off fat deficits.

They are reported to be tightening the belts to avoid going the Greek Bust way,according to BBC latest Euro Austerity Drive Survey Country-By-Country.

In Greece,the crucible of Western civilization and epicenter of the Euro Quake,the embattled Greek government has vowed to bow to EU's stability pact of maximum three percent budget deficit limit by 2014.

This means it has to take tough measures to bring down the current 13.6 percent budget deficit by chopping off public spendings via public sector pay,pension and bonus freeze and cut over next three years.

It also raises sales tax (VAT) from 19 percent to 23 percent and impose 10 percent tax hikes on fuel,alcohol and tobacco.

It has started to plug tax leakages via crack down on tax evasion and on corruption within the tax and customs service.In the PIIGS countries - Portugal,Italy,Ireland,Greece and Spain,tough budgets are being announced and planned.

Among the notable steps are the five percent pay cuts for politicians including the top leaders of Portugal,Spain and UK as key indicator of "leadership by example" in current austerity drive.

In Italy,the pay cut for top public sector earners like ministers and MPs might progressively ne implemented up to 10 percent.

And for every five public sector employees who leave,only one new worker will be taken in new pay freeze and recruitment control policy.

Interestingly,Spain has to reversed social welfare benefit ending 2,500 euros

Well,times are tough as the global recession bites harder.

Mrs.Merkel sums it up when she notes that "Germany cannot live beyond its means".