Progressive political forces in Europe need to act in concert to battle the austerity measures threatening economic nightmares
It is undoubtedly right that the Labour party goes through a period of self-analysis and debate before electing its new leader but the timing could not be worse. Just as the British left retreats into months of introspection, a mammoth crisis emerges across Europe which screams out for protest and mobilisation.
The £6.25bn of savings for the UK announced today are potentially damaging enough but when set in a wider context of the cuts-mania gripping the European Union they become positively terrifying. £6.25bn may not look like a vast amount in the context of overall spending but as a recent analysis revealed, cutting that amount will lead to thousands of job losses and damage growth. And this is, of course, just the beginning, with a full comprehensive spending review planned for the autumn.
Alongside cuts to local services, today’s announcement also included cuts in areas specifically designed to help the economy: such as employment programmes for young people and regional development. And there are rumours of cuts to be announced in industrial investment. It is looking as though a big proportion of these measures that Labour put in place to support the economy through uncertain times is facing the chop.
These plans alongside similar announcements being made across Europe put the future of the UK and the continent at risk. This is not just an economic concern, unpalatable political forces could well flourish in the resulting downturn. Angela Merkel may be under enormous political pressure at home but by leading the calls for eye-watering cuts, the German chancellor is at great risk of repeating historical mistakes that damaged the advanced economies incalculably in the 1930s and the developing economies in the 1970s, 1980s and 1990s. The political consequences in both cases were rarely pretty.
The really tragic part is the austerity packages being unveiled across Europe will not work. Cuts in one country are dangerous enough for a national economy close to recession but simultaneous cuts across a continent still reeling from the biggest financial crisis and recession in decades is absurdly risky.
The damage done to European economies and hence to tax revenues and the public finances could be huge. Deficits will widen and the markets will continue to panic. Indeed, for all the Tory talk of how the bond markets want to see deep and urgent cuts, there are clear signs that the markets are equally worried about the impact of austerity packages on the European and global economies.
The senior politician one might have expected to have intervened early in this situation with some good sense, Vince Cable, is clearly not in a position to speak out. It is only the opposition and wider progressive forces, hopefully supported by a wider movement, that can urgently start calling for some sanity. Alistair Darling has made a typically understatedintervention along these lines but something much noisier is required.
Progressive forces must demand that the EU acts closely together to take the necessary action to restimulate and rebalance the whole European economy. Yes, that will mean richer nations, particularly Germany, stumping up the cash and honestly acknowledging that their economic model is as much to blame for the problems afflicting the EU as any other. And if some restructuring of sovereign debt is required, so be it. The alternative route of deep austerity is to risk a leap into a fiscal, economic and political nightmare. The right may be happy to see Europe sleepwalk into this, the left must shake the continent awake.