The EU Cuts Spain's Public Sector Pay

The EU has stepped in and forced a 5% reduction in the pay of Spain's public sector employees. Spain has a UK-like public sector deficit of 11% of GDP. As a Eurozone member it is meant to adhere to a maximum deficit of 3% of GDP.

As well as pay, pensions and Spain's 2,500 Euro "Baby bonus" are also to be cut.

The EU has been forced to take the initiative given the fall out from the Greek financial debacle.

Will the Tory and Liberal Democratic dare impose such fiscal discipline on the UK economy?

UK Economy Shrinking Faster Than Previously Thought

The Office of National Statistics (ONS) has revealed that the UK economy is shrinking faster than earlier figures. The growth figure for the 1st Quarter of 2009 has been downgraded to -2.4% from the previous -1.9%. Not only is the economy shrinking faster but the ONS has revised 2008 GDP figures to show that the economy started shrinking earlier than previous indications. This means that the UK recession began in Quarter 2, 2008 rather than Quarter 3.

The good news for Chancellor Alistair Darling is that with such poor figures for early 2009, it may well be possible to show that the economy is growing by the time Labour calls the 2010 General Election.

French Economy Overtakes UK

One consequence of the £ falling against the Euro and Dollar is that we are falling down the world rankings for the size of our economy. For so long we've heard that the UK is the world's fourth largest economy. No longer. On a trade weighted index the £ is now the weakest it's been seen 1996 - the year before Labour came to power. As a result the UK has been overtaken by China and France. With a quarterly GDP of $559 billion we are 7.8% behind France who are fifth and 13% of Italy who are seventh.