EU Economies Allowed to Overshoot on Budgets as Brussels Retreats from Austerity
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The European Commission slowed the pace of austerity on Wednesday by allowing six eurozone economies more time to meet its deficit targets. At the same time, the Commission warned that social safety nets were fraying and poverty was rising dangerously in many parts of Europe as efforts to combat unemployment fail to produce results.
The European Commission slowed the pace of austerity on Wednesday by allowing six eurozone economies more time to meet its deficit targets. At the same time, the Commission warned that social safety nets were fraying and poverty was rising dangerously in many parts of Europe as efforts to combat unemployment fail to produce results.
Retreating slowly from tough austerity policies that have been widely blamed for leaving 27 million Europeans out of work, the EU’s executive arm said yesterday that France, Spain, Poland, Portugal, the Netherlands and Slovenia will be given more time to complete their austerity plans.
Related: EU Chief Denies Forcing Austerity On Countries
Unveiling its annual review of economic policy recommendations, EC President Jose Manuel Barroso said budget cuts would still have to be made, but since financial markets have calmed after three years of crisis, there is now more “breathing space”, adding that the leeway should be used to enact much-needed structural reforms.
France will get two more years to bring its budget deficit below 3 percent of GDP, while Spain, Poland and Slovenia will also get two more years to bring down their budget deficits through spending cuts and tax increases.
The Netherlands and Portugal will also have their timetables extended by a year.
Related: Unemployment in Spain and France Soars to Record Highs
Related: Germany Offers 5,000 Jobs A Year To Unemployed Young Spaniards
“Giving more time for certain member states to meet their agreed objectives is designed to enable them to accelerate efforts to put their public finances into order and carry out overdue reforms,” the Commission said in a statement.
“Reform efforts must be stepped up to credibly produce the required outcomes within the new deadlines and excessive deficits must be corrected.”
The fundamental shift away from austerity comes as the eurozone struggles to escape a second consecutive year of recession. Warning that social safety nets were fraying and poverty was rising dangerously in many parts of Europe, Barroso said “there is no room for complacency” and urged EU governments to brace themselves against possible loss of social and political support for reform efforts.
“The social emergency in many parts of Europe and the increasing level of inequalities in some regions add to the pressing need for reforms,” he said.
He added:
[quote] The fact that more than 120 million people are now at risk of poverty or social exclusion in Europe is a real worry. We need to reform, and reform now. The cost of inaction will be very high. [/quote]Related: Could Europe’s Social Crisis Overshadow Its Economic Woes In 2013?: George Friedman
Related: Influential Harvard Paper on Debt and Growth Riddled With Critical Flaws
