Sunday

30th Apr 2017

EU chief defends austerity as criticism mounts

  • Nobody can defend austerity, but countries cannot increase spending, says Barroso (Photo: consilium.europa.eu)

EU commission chief Jose Manuel Barroso has come to the defence of more budget cuts to bring confidence back to southern economies, even as the IMF said the effects of austerity may have been underestimated.

"Nobody defends austerity in Europe, but can anyone tell governments to spend more? There is nothing more anti-social than high levels of debt," Barroso said Thursday (11 October) at a conference organised by Friends of Europe, a Brussels-based think-tank.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He said austerity was not "imposed" by the EU commission - although the institution is involved in the so-called troika of international lenders in Greece, Portugal, Ireland and Spain - but that all the EU rules countries have to adhere to are "taken unanimously by governments."

"We have to put right the balance of responsibility. The reality is decisions are taken by the governments themselves," he said.

At the same time, he pointed out that the deficit and debt rules - known as the Stability and Growth pact - are "flexible" when it comes to worse-than-expected recession. Portugal and Spain have already been given an extra year to meet their targets.

"I think we can adapt and fine-tune in finding the right balance, but this cannot replace true fiscal consolidation, deep structural reforms and target investments," Barroso stressed.

Austerity policies in Europe have come under increasing fire, not only from the streets of Madrid, Athens, Lisbon and Paris, but also from the EU's other partner in the troika - the Washington-based International Monetary Fund.

In its latest World Economic Outlook the IMF admits that its growth forecasts had been wrong because it "underestimated" the negative effect of austerity measures.

IMF chief Christine Lagarde said Thursday at the IMF annual meeting in Tokyo that "more time" was needed for bailed out countries, rather than imposed cut-backs.

“That is what I have advocated for Portugal, this is what I have advocated for Spain, and this is what we are advocating for Greece, where I said repeatedly that an additional two years was necessary for the country to actually face the fiscal consolidation programme that is considered," she said, as quoted by the Financial Times.

Leading economics research institute Nomura agrees. According to chief economist Richard Koo, the budget cuts and structural reforms are like a diabetes cure for a patient suffering from pneumonia.

“The patient can have both, but the doctor has to cure the pneumonia first even if the treatments contradict those required for the diabetes,” Koo told Bloomberg on Wednesday. “In Europe, austerity is the only game in town," he added.

Thousands protest against French austerity budget

French President Francois Hollande faced his first serious public backlash after up to 50,000 lined the streets of Paris on Sunday in protest against his €37 billion austerity budget.

Eurogroup makes 'progress' on Greek deal

Eurozone ministers endorsed an agreement in principle between the Greek government and its creditors over a new package of reforms. But talks on fiscal targets and debt could still block a final agreement.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

SMEs lack support in EU financial plan

The European Commission's plan for a capital markets union is said to be aimed at small and medium-sized enterprises, but many could end up being left out in the cold.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

News in Brief

  1. Vote of no confidence prepared against Spanish PM
  2. Syria to buy Russian anti-missile system
  3. Germany seeks partial burka ban
  4. Libya has no plan to stop migration flows
  5. EU has no evidence of NGO-smuggler collusion in Libya
  6. Poland gets 'final warning' on logging in ancient forest
  7. Commission gives Italy final warning on air pollution
  8. Romania and Slovenia taken to court over environment policies

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceCharlotte Hornets' Nicolas Batum Tells Kids to "Eat Well, Drink Well, Move!"
  2. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  3. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act on Climate Change
  4. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  5. UNICEFRace Against Time to Save Millions of Lives in Yemen
  6. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  7. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  8. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  9. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  10. ACCAEconomic Confidence at Highest Since 2015
  11. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  12. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process