- Corporation tax rate unchanged at 12.5%.
- 10bn euros (£2.5bn) of spending cuts between 2011-2014, and 5bn euros in tax rises.
- Minimum wage to be cut by one euro to 7.65 euros per hour.
- 3bn euros of cuts in public investment by 2014.
- 2.8bn euros of welfare cuts by 2014, returning spending to 2007 levels.
- Reduction of public sector pay bill by 1.2bn euros by 2014.
- Reform public sector pensions for new entrants and cut their pay by 10%.
- 24,750 cut in public sector jobs, back to 2005 level.
- VAT up from 21% to 22% in 2013, then 23% in 2014.
- Raise an extra 1.9bn euros from income tax.
- Abolition of some tax reliefs worth 755m euros.
EU will also have to reconsider its relationship with Russia. A few years ago on a WAIS posting, I raised the question of whether Russia should join the EU and NATO. At the time, one or two people took my proposal seriously, especially since I linked it with Israel as part of the same model of integration. However, the Russians had raised the issue of joining NATO in the 1990s mostly as a way to contain NATO's expansion. At Lisbon's NATO conference in November 2010 the question is Russia's relationship to NATO going forward, with the delicate economic and geopolitical balance of power in the hands of China during this century. Ever since Peter the Great, Russia is more Western than it is Oriental. The world power structure favors Russian integration with the EU and NATO. On 25 November 2010 at a meeting with EU officials, Vladimir Putin rhetorically asked whether Russia and EU should consider integration. EU and Russia have a common destiny and they need each other, especially now that global economic contraction has left EU very vulnerable to debt crises with a contagion effect.
Realistically, I do not expect anything but more of the same case-by-case approach policies on the part of the EU dominant nations to the debt crises, until a major crisis erupts in a large economy, and it is possible that it may not come to that. However, speculators live to amass capital and they will not stop targeting vulnerable EU members, eventually hitting on the larger ones like Spain and Italy, perhaps France if this continues to go unchecked. What will the economic, political and social cost be at that point? We already know that in addition to social turmoil thus far this year across all of Europe, in mid-December there will be pan-EU labor strikes and demonstrations involving millions of people in many European cities. This despite the fact that trade union bosses have been co-opted by political parties serving in government. As I have been saying for more than a year, social unrest will intensify and it will destabilize governments. If nothing is done to address the contagion of managed bankruptcies like those of Greece and Ireland with Portugal, Belgium and Spain waiting in the wings, social upheaval on a wide scale is not so far off as most believed even a few weeks ago during the Athens and Paris strikes and demonstrations.