January 10, 2023
According to a recent analysis, European citizens may have lost out on over €3,000 annually as a result of the austerity measures put in place by EU governments after the 2007 financial crisis.
According to a report issued on Friday by the New Economics Foundation (NEF) and Finance Watch, the EU countries might have spent up to €1,000 more year per person on public services if less drastic budget cuts had been made.
The announcement comes as EU nations are amassing debt at rates unmatched in contemporary peacetime in an effort to combat the COVID-19 pandemic and the impacts of the war in Ukraine.
Austerity measures, according to Frank Van Lerven, program lead for macroeconomics at NEF, have failed.
According to Van Lerven, the last ten years of austerity measures have hurt European economies and prevented an increase in our standard of life.
“A fixation on debt and deficit reduction does not promote economic growth or maintain low debt levels. Instead, austerity has prevented European nations from reaching their full potential.
In an effort to lower the nation’s debt, Brussels enacted harsher fiscal regulations for government borrowing and expenditure during the financial crisis. This was accomplished by reducing public investment and spending.
But as the pandemic spread, the EU suspended the Stability and Growth Pact (SGP) guidelines to give nations more leeway in managing the economic consequences.
According to research from the New Economic Foundation, Europe is now more vulnerable to economic shocks from COVID-19 and the crisis brought on by the war in Ukraine.
According to the analysis, €533 billion would have been available for EU countries to spend on infrastructure projects, particularly green ones, which may have helped lessen the impact of increases in energy prices, if the cuts had not been so severe.
However, Antonios Nestoras, interim executive director of the European Liberal Forum, told Euronews that the report’s findings lack a balanced viewpoint and neglect to take into account other significant factors. He also added that public spending levels can only be effectively managed once a foundation of societal wealth has been created.
Source: Euronews
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