Interestingly, some ideas are going around about what could be done, if anything, to stop the economic slide Europe has now been in for (at least) four years. Of course, the various austerity plans all missed their targets for 2012, though none are anywhere close to be sufficient and usually give a time horizon of anywhere between 2016 and 2018, unsurprisingly aligned with electoral calendars depending of the wiggle room politicians think they’ll need. And those plans are not for budgetary equilibrium, but to get under 3% of GDP, which would not solve much anyway.
Quite a few voices, many in the financial technocracy business claim that we should be doing the opposite of austerity, with ambitious plans to boost growth. Let’s just remember that in the initial phase of the present crisis many governmental programs aimed to do so, by widening the budget deficit to promote economic growth. And what happened? Well, for example an “injection” of 4-5% of GDP spending (read: additional deficit) would bring maybe one, maybe one and a half percentage points of (artificial) growth…. not exactly wise neither efficient. Again, governments do not create jobs or growth, neither does consumption, it is employnment that does…
And here we are really facing a problem! I did like Mrs. Merkel’s comments recently that employment should be the EU’s top-priority, with the youth unemployment reaching 60% is some countries and above 25% in average (did I ever mention that I am a fan of Mrs. Merkel?). And we are not talking about high-school drop-outs here; and those who do find a job do so for meager pay, to put it politely…
As it will likely get worse, what will be the reaction of such a large part of Europe’s future (its youth), as with no hope and no future in the present “system”, they will still want to build one: watch the next elections!
Another worrying piece of news coming out in some EU countries is the increasing percentage of their population living at or below official levels of “poverty”; it is rising fast, very fast, and those official figures rarely take into account the realities of the societies they assess. Historically, when poverty hit various parts of Europe it triggered large emigration waves. That could be interesting, especially as I wonder where the young europeans would go?
In the ranking of countries missing their austerity plan targets, however insufficient those plans might be, and with one of the worst “starting positions”, it appears that the United-Kingdom is ahead of all. Interestingly, it is the first big country to go bust in my book, triggering the socio-economic meltdown that has in fact started some years ago already.
Boy do I hope to be wrong…. so what can and should be done? Some previous blogs do propose possible solutions, however also raising how difficult, if at all possible it would be to push those measures through.
As we are almost at the end of 2013’s first quarter, let’s see what spring will bring us this year…
Simon Q.