14th May 2021

Barroso, Rehn 'unfairly criticised' for eurozone austerity

  • Jose Manuel Barroso finishes his job as EU commission president on Friday. Olli Rehn is now a member of the European Parliament (Photo: Lisbon Council)

As Jose Manuel Barroso steps down as European Commission President (31 October), one of his few left-wing colleagues says that he was unfairly labelled as an austerity ideologue during his time in office.

Laszlo Andor, a Hungarian economist in charge of social policy since 2009, said that it was member states who were fixated on slashing public spending and that the commission itself had few powers - especially at the beginning of the financial crisis - to change anything.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"I don’t think the commission pursued austerity at all," he told this website, adding that Barroso and Olli Rehn, in charge of economic affairs until summer this year, were "unfairly criticized because the European Council sets the political priorities."

Barroso, a centre-right politician, and Rehn, a liberal, became synonymous with austerity measures, particularly as the commission helped oversee the tough reform programmes that accompanied loans to euro countries.

"I think the obsession with fiscal consolidation was on the side of the European Council, which in 2010 and 2011 lost many of the remaining centre-left governments," said Andor.

He said the real question was why the EU went into a second recession when the US and other parts of the world went into a recovery.

"What is largely responsible for this is the pro-cyclical fiscal and monetary policies in 2010 and 2011, as well as the failure to deal with the banking crisis quickly enough."

He noted that the commission was neither responsible for the fiscal policies of countries with surplus accounts (which started budget consolidation) or the decision by the European Central Bank to start raising interest rates "when we were not yet on safe ground".

"These steps or these elements came together in 2010-2011 and by the summer of 2011 it was practically decided that there would be a second recession."

He also hits out at the Germany-led response to the crisis.

It is “not a smart way” to govern a Eurozone beset by economic imbalances “if the deficit countries are pushed to internal devaluation and the surplus countries just exist on having big surpluses. This is the worst outcome.”

“It is very good that Germany now introduces the minimum wage but I would say this is too late and too little,” he added.

The commissioner, who says his portfolio has been beefed up because it is now a fully-fledged part of the strengthened economic governance dossier, noted that the commission put several controversial ideas on the table.

"It's not because of the commission that this was not discussed when it was not yet too late," he says, referring to stability bonds, the common issuance of sovereign bonds for euro states.

He is also downbeat about the extent of the changes made to shore up the eurozone in event of another crisis.

"With this very modest banking union, the problem is not resolved," said Andor, who believes that a fully fledged fiscal union remains the ultimate answer.

EU commission under fire over Barroso bank job

Barroso did not break any rules and the rules do not need changing, the EU commission said, after its former chief joined the bank that helped to break Greece at a turbulent time in Europe.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

News in Brief

  1. No EUobserver newsletter on Friday 14 May
  2. Germany stops Facebook gathering WhatsApp data
  3. Italy rebuts reports of EU deal with Libya
  4. MEPs demand EU states protect women's reproductive rights
  5. At least nine dead in Russia school shooting
  6. Bulgaria interim government appointed until July election
  7. German priests defy pope to bless same-sex couples
  8. New EU public prosecutor faults Slovenia

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. EU aims at 'zero pollution' in air, water and soil by 2050
  2. French police arrest Luxembourg former top spy
  3. Vaccine drives spur better-than-expected EU economic recovery
  4. Slovenia causing headaches for new EU anti-graft office
  5. 'No place to hide' in Gaza, as fighting escalates
  6. EU chases 90m AstraZeneca vaccines in fresh legal battle
  7. Fidesz MEP oversees FOI appeals on disgraced Fidesz MEP
  8. Belgium outlines summer Covid relaxation plans

Join EUobserver

Support quality EU news

Join us