This is not the end of European austerity. But is it the beginning of the end?
The European Commission has issued ‘country specific recommendations’ for most of its member states today – including the UK, although they only have legal force in eurozone economies – spinning the plans as taking the foot off the austerity brake. Clearly unnerved by the impact of its own economic policies, the Commission has given six countries more time to reduce their deficits.
But what the Commission gives with one hand, it takes back with the other. Even though the countries are still required to cut their deficits a bit more slowly, the Commission’s alternative is to take away job security, wage rises and pension rights, all in the name of restructuring to create more competitive, dynamic economies. So although union campaigns against austerity – and the sheer waste of a generation of young people on the dole – are beginning to have an effect on the wilder reaches of deficit fetishism, the Commission’s apparent change of heart is far too little, far too late.
On closer examination, what the Commission is saying about UK economic policy is merely that, were it to stay on target, it would require cutting the deficit of 6% of GDP in half by next year – but that the Commission won’t change its prescription for UK government spending until that stage. This is hardly helpful either for the Commission’s own reputation as an adviser to Governments, and it suggests that the Commission is blissfully unaware that recommendations like this act as a recruiting sergeant for the UK Independence Party!
The Commission also calls on the Government to take steps to deal with the housing crisis, youth unemployment, child poverty and the high cost of childcare, as well as the perennial shortage of funding for investment. The Commission is maddeningly vague in what it suggests as solutions, to the extent that I confidently predict the Government will claim to be addressing all these issues already. And whilst some of the suggestions are fairly radical, such as taxing housing land left unused, it staggers belief that the Commission manages to devote a whole recommendation to shortages of housing supply without suggesting that the Government should actually build houses!