Austerity belt: Looking for the best size

Public workers, small political parties and non-profit organisations stage a protest against government austerity on February 23, 2013 in Madrid. (AFP Photo / Cesar Manso)

As Europeans become increasingly outraged with draconian cuts at home, officials have started to speak about the need to ease the austerity measures. Now the question is how to come up with a middle ground between cuts and economic growth.

Officials across Europe have begun talking about the need to
soften the measures adopted by the debt — ridden economies as a
security for financial help from the troika of international
creditors – the International Monetary Fund (IMF), the European
Commission (EC) and the European Central Bank (ECB).

The latest from French Finance Minister Pierre Moscovici, said
that the country was about to finish its austerity, shifting the
focus to growth.

“We’re witnessing the end of the dogma of austerity” as the
only tool to fight the euro debt crisis
, Moscovici said on
Europe 1 radio. “Austerity on its own impedes growth,” he
added.

The current trajectory of austerity had “reached its
limits”
as European Commission chief Jose Manuel Barroso put
it.

“…in the early phase of the crisis, it was essential to
restore the credibility of fiscal policy in Europe… Now, as we
have restored the credibility in the short term, that gives us the
possibility of having a smoother path of fiscal adjustment in the
medium term,”
explained Olli Rehn, the EU commissioner for
economic and monetary affairs.

‘Cut or grow’ dilemma

Official say that economic stimulus, not painful cuts, are
needed to make the indebted countries grow again.

“An economy is recovering only provided stimulus to speed up
growth is there,”
Martin Schulz, from the European parliament,
told Belgian newspaper L’Echo in an interview.

A usual deficit reduction mix includes higher taxes and lower
spending. The aftermath of such belt tightening keeps knocking the
citizens for six. The unemployment rate in the EU reached its
all-time high of 12.1% in March 2013, which is making some people
across the affected countries take to the streets to express their
outrage at the measures.

Slovenia, Spain and Portugal are the most recent “hot points.”
Protesters flooded Ljubljana, Madrid and Lisbon to voice
disappointment with the troika of international lenders, whom the
public are increasingly blaming for the economic hardship in their
countries.

“Troika means austerity and we have been experiencing for
more than a year and a half the austerity measures which have
destroyed every good prospect of social state, of welfare state.
Now we have over a million and a half unemployed,”
said Joao
Camargo, an anti-troika activist in Portugal.

“… it does seem clear that much of Europe has cut too deeply
and this has killed growth, so completely there will be no
recovery. So, some easing does seem appropriate,”
Ben Aris,
editor-in-chief at

This article originally appeared on : RT