‘Europe must avoid focus on austerity that helped bring Nazis to power’

European policymakers must avoid repeating a “single-minded” focus on austerity that helped bring the Nazis into power in the 1930s German economic crisis, European Central Bank Governing Council member Ewald Nowotny declared yesterday.

“Due to misleading theories, a single-minded concentration on austerity policy led to mass unemployment, a breakdown of democratic systems and in the end to the catastrophe of Nazism,” Mr Nowotny said in a panel discussion in Vienna. “We must avoid the mistakes of the 1930s. We really have to be aware that this is an underlying theme.”

The governor of the Austrian central bank said the determination to avoid those mistakes was present in discussions among central bankers when the financial crisis started in 2007 and 2008 and the fact that US Federal Reserve chairman Ben Bernanke was a researcher of the Great Depression was an important driver of global central banks’ reaction at the start of the crisis.