The austerity experiment in Europe has failed and this is not a secret. Hundreds of articles and research papers have been published in the last couple of years, arguing that the German-led austerity policy which initially aimed at getting the Eurozone out of the financial crisis not only has failed to achieve anticipated results but it has also generated significant rebound effects. In an article in Reuters (November 8, 2013), Nicolas Wapshott argues that “Overall, after five years of austerity, the euro zone, driven by Germany’s fierce adherence to fiscal continence that it has inflicted on the rest of the European Union, still leaves 11 countries in negative growth, including Italy, Portugal, Netherlands, Spain and Ireland. The only nations who enjoy more than 2 percent growth are special-case small countries: Latvia (which has the advantage of being outside the euro), Lithuania, Malta and Luxembourg. Even Germany, the traditional powerhouse of European growth and the champion of worldwide austerity, can only muster growth of 0.5 percent per annum this year.” At the same time, the European citizens are far from being supportive of the austerity scheme. A survey published in last October by Pollsters Gallup indicates that over half of the Europeans believe that austerity policies in the EU have failed: the research firm found that 51 percent of those interviewed thought cutting spending as a way to exit the crisis has failed.
Austerity measures have failed in the UK as well. As John Cassidy writes in the New Yorker (December 7, 2012): “In making his annual Autumn Statement to the House of Commons on Wednesday, George Osborne, the Chancellor of the Exchequer, was forced to admit that his government has failed to meet a series of targets it set for itself back in June of 2010, when it slashed the budgets of various government departments by up to thirty per cent. Back then, Osborne said that his austerity policies would cut his country’s budget deficit to zero within four years, enable Britain to begin relieving itself of its public debt, and generate healthy economic growth. None of these things have happened.”
At the same time, austerity’s effects are widespread and they exceed the economic and financial domains. In an article titled “Europe’s public health disaster: How austerity kills”, published by CNN (September 9, 2013), David Stuckler and Sanjay Basu (both epidemiologists) argue that austerity has caused a vast increase of suicides: “In the U.S., Greece, Italy, Spain, the UK and elsewhere in Europe there were more than 10,000 additional suicides from 2007-2010, a figure that is over and above historical trends, with the largest rises concentrated in the worst performing economies.” In Greece, where Troika imposed the most shocking austerity measures, public health budget cuts are connected to a malaria epidemic, the largest in 40 years, due to respective cuts of the mosquito-spraying budgets. Worse, infant mortality has risen 40% between 2008 and 2010, when the austerity measures peaked.
In Europe, especially in the South, austerity has contributed to social and political instability, while national economies are facing severe recovery problems. There is no doubt that some of these countries have a “sinful past”, especially when it comes to their overgrown public sectors and corrupted political systems. Economic and political reforms are definitely necessary. These societies must be driven towards a new economic model though with respect and sensitivity. The vicious circle of “shocking therapy” is not the answer. Let’s hope that Germany and the EU will get the message and change the course.