Vivien Schmidt’s comment on Mathew Dalton’s September 19 Wall Street Journal article, “Austerity Seen Easing with Change to EU Budget Policy,” was picked up by AP reporter Juergen Baetz. Comment and links to both articles below.
Easing austerity through change to EU budget policy is a very significant move. If agreed by EU finance officials, changing the calculation of the ‘structural deficit’ could go a long way to easing the economic problems—and thereby the political ones–of the Southern European countries as well as Ireland. It is also a silent acknowledgement of the fact that the radical deficit cutting programs of the past three years have failed to address growth. It may not be possible to reverse the financial stability rules and numerical targets of the various Eurozone pacts, but it is possible to reinterpret them. And by reinterpreting them, the worst aspects of those rules, the growth destroying aspects, may be set aside. What we are seeing is the beginning of a process of re-evaluation of the economic policies that have kept growth down while increasing debt-to-GDP ratios, and thereby keeping the Eurozone from exiting the crisis. It is about time.
Austerity Seen Easing With Change to EU Budget Policy – Change Would Have Big Impact on Spain, Significantly Reduce Estimates of Government’s ‘Structural Deficit’ by Mathew Dalton (Wall Street Journal 9/19/13)
EU to Change Budget Calculation to Ease Austerity by Juergen Baetz (Associated Press 9/19/13)