ECONOMY

In Brief

Green light for Spanish cuts after marginal vote Spanish Prime Minister Jose Luis Rodriguez Zapatero won parliamentary approval for the nation’s deepest budget cuts in 30 years by a single vote, setting up a fight over his 2011 budget that could decide the fate of his government. Aided by the 13 abstentions, Zapatero’s Socialists carried the vote 169 to 168, Parliament Speaker Jose Bono said yesterday in Madrid. Zapatero lacks a majority in parliament, making him dependent on other parties to pass legislation. Yesterday’s vote signals that it may be harder for him to garner support for his budget plan than in past years. The austerity measures, which include the first public wage reduction in Spain’s 30-year democracy, have prompted unions to call a strike and eroded the Socialists’ popularity. «We don’t support this plan but we need to be responsible,» Josep Duran, who spoke for the regional Catalan party CiU, whose 10 members abstained, told lawmakers in parliament yesterday. (Bloomberg) Cypriot tourism income plunges amid volcano ash NICOSIA (AFP) – Revenue from Cyprus’s key tourism sector plunged 17.1 percent in April when the eruption of the Icelandic volcano severely disrupted flights across Europe, official figures showed yesterday. Last month at least 20,000 holidaymakers failed to make it to the eastern Mediterranean island, even though both of its international airports remained open. Total arrivals in Cyprus in April were down 23 percent. More than 350 flights between Cyprus and Britain and Northern Europe – the country’s major tourism markets – were canceled during the mid-April volcanic ash cloud alert. In April, tourism revenues dipped to 89 million euros, down from 107.4 million in the same month of 2009. Morale drops Cyprus’s economic morale receded in May after a sharp upturn in April, on the back of a poor outlook for services, construction and manufacturing, a publicly funded survey said yesterday. The Economic Sentiment Indicator (ESI) fell four points in May to 66.6 points, following official data showing the economy slipped back in the first quarter, the University of Cyprus, which prepared the survey, said. Respondents rated the prospects of the services sector as improving, but were downbeat on their present economic situation, the survey said. There was also a negative business climate in construction, based on the current overall order books. Cyprus fell into recession in 2009 for the first time in more than three decades on a drop in tourism earnings and a poorly performing real estate sector. (Reuters) Crisis contained? Europe’s sovereign debt crisis is likely to be contained within the region as the recovery trajectory in the USA and Asia protects them from contagion, Federal Reserve Bank of St Louis president James Bullard said. «The recovery in the USA is strong, Asia is very strong. I just don’t see this coming out of Europe,» he told reporters in Stockholm, Sweden, yesterday. (Bloomberg) Italian budget Prime Minister Silvio Berlusconi said Italy’s planned 24.9 billion euros ($30.4 billion) in budget cuts over the next two years are «absolutely necessary» to defend the euro and protect Italy. The measures are part of a European effort to convince investors the region can control budget deficits and shore up the euro, which has fallen 15 percent this year. The package aims to reduce Italy’s budget gap by an additional 1.6 percent of gross domestic product to bring the shortfall to within the EU limit of 3 percent of gross domestic product in 2012 from 5.3 percent last year. «The sacrifices requested are absolutely necessary to defend our currency,» Berlusconi said at a press conference in Rome to explain the measures. «Defending the euro today means saving Italy’s future.» (Bloomberg) Difficult year Hellenic Bank, Cyprus’s third-largest lender, warned 2010 would be a difficult year for its main markets of Cyprus and Greece, though it posted a net profit in the first quarter. The bank said it posted a first-quarter net profit of 7.2 million euros ($8.85 million), compared to a 12.8-million-euro loss in the first quarter of 2009. (Reuters)