Portugal’s government said austerity measures contained in its 2012 budget, submitted to parliament Monday, will cause the economy to contract by a more than previously forecast 2.8 percent.
Finance Minister Vitor Gaspar told a press conference that the floundering world economy “will lead to a contraction of gross domestic product of 2.8 percent, following 1.9 percent this year,” in Portugal.
The government had previously envisaged the economy would shrink by 2.3 percent in 2012 and 1.8 percent this year. The Bank of Portugal had put the estimates at 2.2 percent and 1.9 percent, respectively.
And Spain‘s economy continues to deteriorate in the worst possible way:
The number of unemployed in Spain swelled to a record high of nearly 5 million in the third quarter, as a sputtering economy failed to create jobs amid mounting global financial uncertainty, according to government numbers released Friday.
The 4,978,300 unemployed amounted to a jobless rate of 21.5 percent, the highest since 1996 and up from 20.9 percent in the previous quarter. It remains the highest rate in the 17-nation eurozone.
Spain is struggling to recover economic growth after crawling out of nearly two years of recession prompted to a large extent by the collapse of a real estate bubble.
It now seems that France has little choice but to join the austerity budgeting brigade with Sarkozy warning his country of the coming budget cuts in a recent television broadcast:
“We will have to revise and adapt our budget plan to the new reality,” Mr. Sarkozy told an estimated 12 million viewers as he revealed that his government had lowered its forecast for next year’s gross domestic product growth to 1 percent from 1.75 percent. To compensate for an anticipated decline in 2012 tax revenues, he said that by mid-November he would announce a program of budget cuts of about $8.5 billion to $11.3 billion.
“It’s because of this debt crisis that we find ourselves in a situation of having to defend France’s triple-A” credit rating, Mr. Sarkozy said, noting that a rating downgrade would only increase the interest burden on the country’s public debt, already at more than $70 billion a year.
The German economy, Europe’s biggest, will fail to grow in the current quarter after expanding 0.4 percent in the previous three-month period, the DIW economic institute said.