Saturday

2nd Dec 2023

Brussels calls for still more austerity

  • Debt-loads will continue to climb unless still further cuts are made to public spending, the commission argues (Photo: Images_of_Money)

EU countries under market pressures must be prepared to swallow even stronger doses of austerity, the European Commission said on Monday (12 September).

Most states have slashed tens of billions from their public spending plans already, but this may not be enough, according to an annual report from the EU executive on the state of public finances in the bloc, as debtloads continue to grow.

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

"Member states facing market pressures must continue to deliver on reaching their fiscal targets and take additional measures if needed", economy commissioner Olli Rehn said in a written statement upon the release of the report.

Unusually, Rehn himself did not appear publicly to present the findings, cancelling a scheduled press conference due to a "serious family matter", according to his spokesman, Amadeu Altafaj-Tardio.

The head of the commission’s economy department, Marco Buti, wrote in a gloomy "editorial" at the front of the document that despite a return of GDP growth, the withdrawal of stimulus and budget-cutting exercises across the bloc, "debt is still expected to continue increasing for the next year or so in most cases. Once it has reached its peak, the issue is not over.

"It will not be sufficient to stem the increase; rather, additional consolidation measures will be required to reduce it from its new level", he continued, arguing that Europe’s aging population will add still further pressures on public finances in the coming decades as a result of the higher costs of ageing and lower growth as a result of fewer working-age people.

Buti also talked down the "optimism" found in economic forecasts earlier in the year: "Doubts on continued steady output growth have emerged and the optimism of the Spring that the European economy is emerging into the post-crisis world has become more cautious".

The paper went on to say that the bloc’s economy is to expand around 1.9 percent in 2012 while average euro-area public debt will rise to 88.7 percent of GDP, up from 87.9 percent this year.

Despite multiple rounds of austerity already imposed, Greece for its part will see its debtload climb to 166.1 percent of GDP in 2012, up from 157.7 percent this year.

After a contraction in 2009, in every EU country apart from Poland, growth returned in 2010 in all but five peripheral countries, the paper said, and continued through the beginning of 2011. However, overall output level is expected to only just approach its pre-crisis level by the end 2011.

As a result, argues the report, "the need for consolidation should not be underestimated. The years of the crisis left behind a legacy, not just of support measures that need to be reversed, but of lasting weaknesses to the public finances".

The document goes on to say that while governments can reduce debt levels through a mix of spending cuts or increasing taxes or a mixture of the two, governments should embrace cuts over tax hikes, as "evidence from the past shows that cuts have greater success, in terms of the effect that they have on the overall public finances."

At the same time however, the paper says that those countries with "fiscal room of manoeuvre", should go more slowly in their debt-reduction measures in order to "mitigate the effects of a slowdown of the recovery on activity and jobs while sticking to their structural adjustment paths".

Greece unveils fresh cuts as euro pessimism spreads

The Greek government has unveiled a fresh round of austerity measures amounting to €2 billion as pressure mounts on the country to deliver on its commitments to reduce its debt-load.

Mass strikes, protests hit Italy, Spain over EU-imposed austerity

Popular anger over Europe’s strategy of austerity for exiting the eurozone crisis spread to Italy on Tuesday as the country was paralysed by a general strike. Hundreds of thousands of ordinary Italians poured into the streets of over a hundred cities and towns to protest what Brussels, Frankfurt and Berlin demand.

Cracks show in EU austerity doctrine

If the subtle change in emphasis in the EU’s discourse on austerity is to be believed, some in the bloc are beginning to be much more open to policy options beyond public-sector cutbacks.

Austerity cuts not to blame for Greek drug shortage, EU says

The European Commission has said its austerity measures are not to blame for a decision by pharmaceutical giant Roche to halt delivery of cancer drugs to Greek public hospitals. The company warned Italy, Portugal and Spain might be next.

Opinion

Dubai's COP28 — a view from the ground

Discussion of the biggest existential threat humanity has ever faced is barely mentioned on billboards or signage in Dubai — yet visitors are made aware quite quickly that t world rugby sevens tournament is imminent.

Opinion

'Pay or okay?' — Facebook & Instagram vs the EU

Since last week, Mark Zuckerberg's Meta corporation is forcing its European users to either accept their intrusive privacy practices — or pay €156 per year to access Facebook and Instagram without tracking advertising.

Latest News

  1. Israel's EU ambassador: 'No clean way to do this operation'
  2. Brussels denies having no 'concern' on Spain's amnesty law
  3. Dubai's COP28 — a view from the ground
  4. Germany moves to criminalise NGO search-and-rescue missions
  5. Israel recalls ambassador to Spain in new diplomatic spat
  6. Migrant return bill 'obstructed' as EU states mull new position
  7. Paris and Berlin key to including rape in gender-violence directive
  8. What are the big money debates at COP28 UN climate summit?

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us