Europe still mired in austerity, slow growth and possible recession and excessive unemployment

The situation in Europe continues to be worrisome and exasperating. The stubborn ideologically driven opposition to stimulating the economy through major infrastructure and employment creating investments and a supportive low interest monetary policy including where appropriate quantitative easing is long overdue for replacement. The unemployment rates in Spain,26.6 % Ireland 14.4%, Greece 26%, France 10.5 %, Italy 11.1%, Portugal 16.3 %, Slovakia 14.5%, Hungary 10.9 %, Bulgaria 12.4 %, Latvia 14.1%, Lithuania 12.5 % are all very elevated. The total number of people unemployed in the EU has risen by over 2 million people since November 2011. It should now be clear that austerity is the wrong policy to overcome a deep recession. Despite this clear evidence austerity bound politicians carried the day in the European debate over their administrative budget. Fortunately, this budget is only a small percentage of the European GDP so the consequences are not great in any immediate sense. Rather , the problem is the symbolic value of the victory which suggests that aside from France there are no powerful political forces committed to ending austerity and switching to stimulus. Yet, this is the only sensible policy under the circumstances. Future historians of this slump will look back in astonishment at the level of policy ignorance displayed by the European leadership.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
This entry was posted in austerity, business cycles, classical economics, deficit hysteria, deficits and debt, European debt crisis, European unemployment, France politics+economy, full employment, J.M.Keynes, Keynesian multiplier, labour market clearing, monetary policy, quantitative easing, Spain, treasury view, U.K. economy, Uncategorized, unemployment and tagged , , . Bookmark the permalink.

2 Responses to Europe still mired in austerity, slow growth and possible recession and excessive unemployment

  1. circuit says:

    Totally agree! Your last two posts hit the mark: there’s no evidence that austerity boosts growth. In fact, empirical studies predating the current austerity fad support the claim that austerity is contractionary, as you demonstrated in your previous post. At least the US government recognizes this point now, right?

    • Well for the most part it does seem clear that President Obama and the Democrats recognize this fact but because the Republican dominated House of Representatives refuse to, cuts are still on the table in Washington. Also President Obama made deficit reduction a priority prematurely. He should have waited until the unemployment rate was well below 6 % before addressing that issue. The structural deficit, if in fact there is one, is affected by the rate of unemployment you are operating the economy at. The lower the rate the lower the deficit.

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