Monday, 8 March 2010

Portugal budget plan cuts investment, caps wages

"LISBON (Reuters) - Portugal plans to cut its budget deficit to below the EU's 3-percent limit by 2013 by reducing investment and capping public sector wage growth, although it will also rely on the economy recovering from this year.The plan, which Portugal has to submit to Brussels, projects a fall in the deficit to 2.8 percent of gross domestic product in 2013 from 8.3 percent this year and also raises taxes on high incomes and stock market gains, according to a draft document.The Socialist government's austerity plan, whose growth forecast for 2011 is broadly in line with latest published projections by the European Commission, is seen as key to convince markets Portugal will tackle rising deficits and debt. That in turn is vital as investors assess whether the country may be next in line to run into Greece-style fiscal problems."

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