LONDON — Following the Greek financial crisis, governments in Europe have been adopting austerity measures designed to reduce public sector deficits. The main reason that cuts in governments expenditure are needed is that unless clear and determined steps are taken to reduce public sector deficits, governments may no longer be able to borrow on reasonable terms and could ultimately default on their debts as was feared for Greece.
The countries with the highest public deficits in Europe have been Greece, Portugal, Ireland and Spain, the so-called PIGS. But other European countries with deficits higher than those permitted under the Maastricht Treaty include Italy, France and Germany among euro-zone countries, and Britain, which has not adopted the common currency.
Austerity measures forced on the Greek government have led to unrest and strikes by public sector workers.