Backlash against austerity claims its latest victim: the Bulgarian prime minister

February 20, 2013
Obsession
Euro Crunch
February 20, 2013

Bulgaria’s prime minister, Boiko Borisov, stepped down unexpectedly today after several days of protests over electricity prices, corruption and austerity.

The popular PM resigned after clashes between police and protesters in Sofia turned violent. “We have dignity and honor. It is the people who put us in power and we give it back to them today,” Borisov, whose center-right GERB party won in a landslide in 2009, told parliament. “I cannot stand looking at a bloody Eagles’ Bridge…. Every drop of blood is a shame for us.”

The protests that have rocked Sofia in the last few days initially railed against high electricity prices due to power-company monopolies. However, anger about corruption scandals and government ineptitude soon stoked even more popular unrest.

And, of course, austerity. Bulgaria has proven particularly disciplined in reining in government spending—it slashed its budget deficit to 0.5% of GDP in 2012, down from 2% in 2011—and, unlike Hungary and Romania, declined a bailout. Borisov managed to stave off the sort of anti-austerity angst that has wracked other euro area countries by, for example, freezing wages and pensions instead of cutting jobs, reports the Wall Street Journal (paywall). The country is expected to bring the deficit to less than 2% this year, and the debt within 20% of GDP.

But that discipline has come at a price. And despite 10 consecutive quarters of economic expansion, growth is slowing and Bulgaria is still the poorest country in the EU. That’s exacerbated by high energy costs, which the government hiked by some 13% last July. Unemployment now stands at 11.9%, the highest level in 10 months, while wages have stagnated.

The Financial Times reports (paywall) that a “snap election now seems almost certain” and that the parliament will vote tomorrow on how to proceed.

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