PARIS, May 30, 2010 (AFP) – As European governments rush to cut budget deficits with draconian austerity measures, experts are warning that the fallout could mean a shutdown in Europe’s tentative economic recovery. The IMF’s chief economist, Olivier Blanchard, has said there is “a risk… of austerity zeal in some countries under pressure from the markets.”
After Greece’s near-bankruptcy threatened to engulf world financial markets earlier this year, other European economies have rushed in recent days to put forward often controversial plans for getting their public finances in order.
Governments from left to right have announced draconian austerity action from top to bottom, varying from ministerial pay to unemployment benefits.
Italy, Portugal and Spain have been the main countries to have followed suit and the French government has announced it is planning to raise the official retirement age from 60 — a move that sparked major public protests this week.
Britain’s new coalition government has also announced a first round of 7.2 billion euros (9.0 billion dollars) in cuts.
“The austerity plans are so tough that if they are implemented simultaneously across Europe, the impact on growth no