A Future With No Safety Net? How Brutal Austerity Cuts Are Dismantling the European Dream
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The European Union (EU) has asked its citizens to brace for further economic misery. In a report on European economic prospects released on May 3, the European Commission said that further deterioration is expected to last at least until 2015. But, as every such report says, things will then get better.
Unemployment in the euro area is expected to climb to 12.2 percent this year, up from 11.4 percent last year. In Spain, unemployment will rise to 27 percent, up from the 25 percent of last year; in Portugal it will rise from 15.9 to 18.9 percent; and after three brutal years of suffering, in Greece it will climb by 2.7 percent to 27 percent.
The trend will be devastating for young people: in Spain alone, it is estimated that 52 percent of young people will be without a job. We are creating a generation that will probably never get back on track.
The same trend is also unfolding in the rich countries of northern Europe. The German economy is expected to grow this year by a mere 0.4 percent, and from Austria to the Netherlands, the picture is one of decline.
This crisis is sapping the foundations and the identity of Europe. Since the end of the Second World War, Europeans have come to expect a social safety net that would cushion the less fortunate until they were able to spring back to work and dignity. Compared with the American dream, in which anybody could achieve the highest economic and social status through individual effort, without meddling by the state, the European dream was very different.
Now, however, most economists agree that this dream has become very distant because there is no way that the economy can lift that many people any longer. In Europe, austerity is eliminating the social safety net.
But while the United States and Japan have taken the road of economic stimulus, injecting massive quantities of money into their systems every month, and already with some visible results, Europe has taken the opposite direction. The European policy is to cut public spending and raise taxes simultaneously as the recipe for eliminating deficits. And, despite clearly available facts and the declarations of some accepting the need for growth, this policy is not changing.
Besides losing its gloss, the EU is fostering a growing resentment. On the same day the European Commission report was released, the strongly anti-Europe United Kingdom Independence Party (UKIP) registered a major success by taking 25 percent of the votes cast in local elections in the United Kingdom. Similar parties are sprouting everywhere, from Belgium to the Netherlands, from Austria to Finland. And, for the first time, a similar party in Germany is now running on a platform to leave the Euro.
The lack of effective leaders who are up to the task is allowing the cracks in Europe’s foundations to grow. In Spain, Prime Minister Mariano Rajoy enjoys a comfortable majority in parliament but is vilified every day by demonstrators throughout the country. In France, President François Hollande also enjoys a solid majority but he now has the approval of only 25 percent of the electorate. Portugal has an almost identical situation, Greece has a very strong anti-austerity and anti Europe party and Italy has a new government with an uncertain future.
Few realise that Italy is a special case of malfunctioning and lack of synchronism with Europe. The end of the Cold War led to the death of the modern Italian political parties, which were created and fuelled by the Cold War: the Communist Party and the Christian Democratic Party.