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Crisis hit euro zone economies

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Crisis hit euro zone economies
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The euro zone countries whose economies are causing disquiet to investors are Greece, Spain, Portugal and Ireland.

Investors are worried those governments may not being able to repay the money they have borrowed by selling bonds.

Portugal’s minority Socialist government is struggling with a budget deficit which last year hit 9.3 percent.

It is proposing spending cuts to reduce the deficit to 8.3 percent of GDP this year and to less than three percent by 2013.

But the opposition has already blocked some austerity moves demonstrating that the government is not in full control, something which will further disconcert the markets.

Ireland’s deficit is four times the three percent level allowed under European Union rules.

The Dublin government is committed to four billion euros of spending cuts for this year’s budget along with tax increases and said that its measures will help the economy start recovering from the end of the year.

The debt markets approved and Irish government bonds are more popular than those of the other
troubled euro zone economies.

Greece, with its 300 billion euros of public debt, has won conditional approval from the European Union for its austerity package but Brussels has said more spending cuts may be needed.

That would further anger workers. Greece’s main public sector union plans a nationwide, 24-hour protest strike next Wednesday that’s expected to affect all public services and flights.

In Spain one of the biggest problems is unemployment at around 19 percent since the construction bubble burst.

Prime Minister Zapatero wants to reform the labour market but is meeting opposition from the unions.

If he cannot get their cooperation that would increase market doubts over the government’s ability to enact a 50 billion euro austerity plan.