Austerity and growth: a fine balancing act

Peter Taberner, New Europe, 25.05.2012

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As EU leaders met on 23 May to discuss which course of action should be taken to ensure economic growth, Germany and France were already at loggerheads over the issuance of ‘Eurobonds’, which would be underwritten by all 17 eurozone states. […]

Janis Emmanouilidis, a senior policy analyst with the European Policy Centre, opined: “First of all there will not be a result from the 23 May meeting, and its more of a precursor to the June summit. The question is to what level the actual effect on growth will be from the choices made, it’s not about an emphasis on one decision on a single way of thinking , its about producing a package.”

“The devil is really in the detail of the measures for growth to be used, the member states have to reduce public expenditure and deficits as the overall levels of debts are unsustainable. There will be no miracle happenings for economies such as Greece and Portugal, that will be a long process that will take years.”

Looking to the future it’s the PIIGS economies that will need to be pulled up if the EU is to recover sustain ably.

Emmanouilidis added: “If we have a growth pact that targets the whole of the EU the effects will not be great. Part of the structural problem for EU member states is that there has not been a convergence of European economies, the divergences has contributed to the crises, and the vulnerable countries are the ones that need help.” […]

For the entire article see here.


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