A new austerity plan from Greece´s Government aimed at obtaining the new financial help from the EU is under way
The plan will cut some pensions by 20 per cent, put 30,000 state workers on 12 months' notice with a 40 per cent pay cut and extend by at least one year a new property tax.
These measures will surely increase social unrest. This is expected to happen also in Italy and Spain as both countries are showing signs of lack of determination to reduce spending and implement fiscal balance.
In my opinion the situation is manageable from a technical point of view although from a political perspective the situation is explosive.
In first place, the European Union is not showing commitment and determination to put in place the measures needed to re establish balanced National figures in the weakest countries. The northern ones are stronger while the ones in the south are weaker in terms of fiscal situation.
If we see a uniform and firm approach from the leading economies in order to strengthen the Union´s situation, the general perception will change.
In second place The weak Government in Spain, with presidential elections in 60 days is doing nothing. The unpopular figure of the Italian president and his lack of action are not helping at all.
Finally the worst case scenario would be the common European currency disappearing.
I do not see it happening so far, although this is becoming a common topic in certain power circles.