Europeans €3,000 poorer per year due to austerity measures, says new report
European citizens have lost out on nearly €3,000 a year because of the austerity measures implemented by EU governments since the 2007 financial crisis, according to a new report.
The study by the New Economics Foundation (NEF) and Finance Watch released on Friday also says that EU countries could have been spending up to €1,000 more annually per person on public services if less harsh cutbacks had been applied.
The news comes at a time when EU states are racking up levels of debt unseen during modern peacetime to mitigate the COVID-19 pandemic and effects of the war in Ukraine.
Frank Van Lerven, programme lead of macro-economics at NEF, said austerity measures have been a failure.
“The last decade of austerity policies has damaged European economies and stopped our living standards from improving,” Van Lerven said.
“An obsession with debt and deficit reduction neither boosts economic growth nor keeps debt low. Instead, austerity has held European countries back from their potential.”
After the financial crisis, Brussels introduced fiscal rules for government borrowing and spending that were stricter -- the idea being to reduce national debt. This was done through cuts to public spending and investment.
But as the pandemic hit, the EU suspended these rules – known as the Stability and Growth Pact (SGP) – to allow EU countries more flexibility in handling the economic fallout.
The research from the New Economic Foundation found that previous austerity measures have left Europe more vulnerable to economic shocks from COVID-19 and the crisis sparked by the war in Ukraine.
If the cuts had not been so severe, it says €533 billion would have been available for EU governments to spend on infrastructure projects, including green ones,
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