Austerity must go hand in hand with growth

It would be a grave error to allow the excitement of Francois Hollande’s historic victory on Sunday to overshadow the results of the Greek general election. It was, of course, Greece’s sovereign debt crisis which sparked the ensuing crisis in the Eurozone. Moreover, the Greek people never accepted the consequent austerity measures. Whatever your view of those who demonstrated on the streets of Athens, it was always clear they had widespread support.

The short premiership of Eurozone appointee Lucas Papademos did nothing to assuage the opposition to austerity. Now, given the chance to once again elect their government, the Greeks have said no to austerity. Having come second in the inconclusive poll on Sunday, the far-left Syriza Party are incredibly in talks to form a coalition. If they are not successful the baton will pass to the leader of Greece’s socialist party, PASOK, former Finance Minister Evangelos Venizelos.

Both the Greek and French result aptly demonstrate that austerity on its own without plans for growth, while never popular, is now losing whatever credibility it had for solving Europe’s economic problems. Put simply, the people will no longer put up with recession, unemployment and public expenditure cuts seemingly for no gain.

Now that two general election results have delivered this verdict along with local elections in Italy, another country under a Eurozone appointee, it is surely time to re-evaluate the austerity strategy. German Chancellor Angela Merkel said on Monday it was of “utmost importance” that the programmes of austerity and economic reform as a condition of the €174 billion Greek bail-out package “continue to be implemented”. She also made clear that “The process is a difficult one, but, despite that, it should go on.”

Likewise the European Commission would do well to think again as they seem to be taking a pro-Merkel line. A spokeswoman said it was up to the Greek political parties to “work in an atmosphere of responsibility” and continue implementing structural and economic reforms.

The only realistic way out the austerity deadlock with the people on one side and powerful financial vested interests, not to mention the leading lights of the Eurozone, on the other is to seek a middle way. Just as Labour Shadow Chancellor Ed Balls has always said, austerity must go hand in hand with measures for growth. Austerity alone causes huge suffering – unemployment and poverty coupled with the absence of hope. The people of Europe need to believe there is a future and a relatively strong one at that. Angela Merkel’s regime is providing the exact opposite and the people are making their views known.

While I would never claim the British local election results were wholly based on opposition to austerity measures, they clearly showed that our electorate prefer Labour to the current coalition. On the basis of those results Labour would form a government. We are seeing the Tory-led coalition sinking deeper into the mire as Cameron and Clegg try to revive their flagging fortunes. We should, perhaps, add the UK to the list of those countries who have had enough of austerity and want to feel hope for their future.

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3 Comments

Filed under Labour Party

3 responses to “Austerity must go hand in hand with growth

  1. growth plus austerity equals small state

    i.e. cutting government expenditure and relying on the private sector to create the job vacancies

  2. the title is in fact a little ambiguous, rather like ‘dogs must be carried up the escalator': does it mean ‘if you have a dog you must carry it when you go up the escalator’ or does it mean that you cannot go up the escalator unless you carry a dog

    Like do we mean that if we pursue austerity we must also have growth, which I am sure mary agrees with, but does she also mean that if you have growth, you must also have austerity

    in the latter case, which was my first interpretation, the logic of such an approach is smaller government, just as I pointed out

    but if you believe you need austerity as well as growth, one must also outline when austerity will not counteract growth: if one cannot, then one must initially pursue growth

  3. I am amazed at how little positive information comes out of the EU about its very beneficial activities.

    Although given Britian’s anti-EU popular press, it is not surprising that many people buy into their commentaries, given that they are superb in making their stance seem “reasonable”.

    The EU has the potential to be a force for good and has a great story to tell. The appeal of the EU for me is while I like being English/British I would also like to be a citizen of the world.

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