Austerity in the EU
What a difference a day makes and — hopefully — what a difference the incoming leader of the European Commission, Jean-Claude Juncker, will make to all our lives.
As the new commission was voted in by MEPs yesterday, he launched a broadside against austerity, boldly stating: “To those who think excessive austerity will automatically revive growth and create more jobs, they should drop those ideas.”
That is in direct contrast to his immediate predecessor Jose Manuel Barroso who was a key architect of the austerity policies that have ruined the lives of millions of EU citizens. Barroso was no friend of Ireland, either, refusing to consider the Irish people getting back any of the €65bn we have pumped into the banks in order to help prevent contagion.
Where Barroso offered little more than despair in recent years, Juncker appears to offer hope. Addressing the European Parliament, he called for greater flexibility and investment and warned that increasing member states’ debt levels was not the answer to the EU’s economic problems.
The former Luxembourg prime minister warned that voters were losing patience with EU bureaucracy and the continuing failure to create jobs and prosperity. He promised a detailed plan for a €300bn investment programme for the EU within two months of him taking office on November 1.
Juncker said Europe was facing a challenging period economically, with investment at an all-time low. “There’s been a 20% drop in investment in most countries since 2007, a 36% drop in Portugal, and a higher fall in Greece,” he said. “Without investment, economies can’t grow and economies that can’t grow can’t provide employment.”
That kind of talk might get him into trouble with Angela Merkel and her fellow austerity fetishists who continue to bully Greece and other heavily indebted EU states to continue to cut spending. When in June 2013 the majority of Greeks voted either to delay or to cancel their EU-imposed austerity plan, Merkel immediately warned: “No departures can be made from the reform measures ... We have to count on Greece sticking to its commitments.” A year on and with youth unemployment at more than 50%, Greece is reduced to the status of a developing nation.
According to Mehdi Hasan, author of The Debt Delusion, Merkel’s austerity-driven ‘solution’ to Europe’s financial crisis has brought the world to the brink of a second Great Depression. He examined a study published in 2010 where analysts at the International Monetary Fund found just two cases, out of 170 examples across 15 developed economies between 1980 and 2009, in which cuts in government spending turned out to be good for the economy. “Fiscal consolidation typically has a contradictory effect on output.”
But austerity has wider implications beyond economics, something that eludes Merkel and her allies. After decades of coming together as a union of European states, her policies have created divisions, leading to the rise of radical political movements. As Juncker put it: “Citizens are losing faith. Extremists on the left and right are nipping at our heels.”
Let us hope that Ms Merkel was listening.
© Irish Examiner Ltd. All rights reserved