Euro Rises on Greek Pledge to Cut Spending

The euro made gains this morning, rising to $1.3637 by mid-day trading in Europe after Greece put forward an “austerity package” consisting of tax increases and spending cuts worth €4.8 billion (US$ 6.5 billion). Intended to reduce Greece’s deficit, the latest measures include increasing the Value Added Tax (VAT) to 21 percent from 19 percent. Spending cuts will also be implemented that will reduce civil servant bonus payments and also limit paid holidays and special bonuses.

While the currency market responded positively in the short-term, it remains to be seen whether these moves will be sufficient to persuade the rest of the EU to provide additional financial support.

Reaction from the public however, was immediate. Greece has already suffered several large-scale public protests condemning earlier cuts to spending, and there is little doubt the latest round will touch off further demonstrations.

Source: BBC News

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