28th Oct 2016

EU chief defends austerity as criticism mounts

  • Nobody can defend austerity, but countries cannot increase spending, says Barroso (Photo:

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.

Stakeholders' Highlights

  1. ANCI LazioAnci Lazio Definetely has a lot to Celebrate This Year
  2. EU-China ForumDebating the Future of the EU-China Relations on 28 November in Prague
  3. COMECEMigrants: From Fear to Compassion
  4. Birdlife EuropeBusiness as Usual - Juncker Snubs Environment and Protects Broken CAP
  5. EFADraft Bill for a 2nd Scottish Independence Referendum
  6. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  7. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  8. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  9. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  10. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  11. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  12. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum

Latest News

  1. Greece to probe UN allegations of illegal returns
  2. Poland defies EU on rule of law
  3. Belgium breaks Ceta deadlock
  4. Left MEPs thwarting Dieselgate probe, say right MEPs
  5. Cars should be allowed to exceed emissions limits, say experts
  6. EU case against Google is bad for developers
  7. Privacy activists mount court challenge to EU-US data pact
  8. Thousands of Nato soldiers go to Baltic states, Romania