Leading article: Germany can't ignore the austerity backlash

 

Share
Related Topics

A consensus is starting to emerge that something needs to budge in terms of the current orthodoxy on the economics of austerity. In short, Europe, starting with Germany, needs to review the terms of the fiscal compact, loosen monetary policy and accept that cuts alone are not leading us towards recovery. If we continue where we are, the danger is that political instability of the kind that we are already seeing in Greece will spread, in some cases propelling extremists to the fore.

The message from Europe's electorates in recent weeks has been consistent. Voters are saying they have had enough of bitter medicine that holds no prospect of recovery and no longer trust parties committed to Berlin-mandated austerity. In France this sentiment swept away Nicolas Sarkozy and brought in François Hollande. In Greece, frustration at the prospect of relentless decline is encouraging more disturbing political options, from the fascists of the Golden Dawn to the left-wing fantasists of Alexis Tsipras's Syriza party.

If Greece goes to the polls again, which looks likely following the failure of coalition talks, Syriza's hard-left, anti-austerity coalition is on course to win about 27 per cent of the vote, becoming the main political force in the country. Spain's economic outlook is almost as desperate. Madrid has no hope of meeting its budget deficit targets and must impose more cuts or be fined by the EU – a bewildering set of choices for a country where 23 per cent of people are out of work already. Meanwhile, Ireland's referendum on 31 May on the EU fiscal treaty will be another test of whether Europe's voters are ready to take more pain on the back of vague promises of gain in the very distant future.

Until now the messages from Brussels and Berlin have been the familiar ones: there is no alternative and the lady is not for turning, the lady being Chancellor Angela Merkel. But this may be changing. In the commission there is growing acceptance that the existing policy cannot be sustained if every government that adheres to it is rejected at the ballot box.

That leaves Germany as the great bulwark of fiscal orthodoxy, but even German voters are questioning Ms Merkel's rigidly debt-phobic economics. Fresh after losing the state of Schleswig-Holstein, she last night lost North-Rhine Westphalia, Germany's most populous state, which went to the polls yesterday.

No one in their right mind is arguing for the voodoo economics that Syriaz is proposing for Greece. Perhaps nothing can stop Greece from sliding into prolonged chaos, which will increase the likelihood of its exit from the euro. If that happens, Europe will have to deal with the shock. But in the meantime, what needs to emerge, especially after voters deliver another verdict in the French parliamentary elections in June, is recognition that things cannot go on as they are indefinitely.

The adjustment to lower public spending needs to be slowed while Germany must be persuaded to sign up to a growth compact, which means Germans living a little more extravagantly than they are used to, buying more from their European partners and taking the risk that this will lead to higher inflation. Anathema to many Germans, starting with Finance Minister Wolfgang Schäuble, who will ask why hard-working Germans should pay for others' mistakes. The answer must be that it is not in Germany's interest for large parts of the rest of Europe to go under. Germany's enviable prosperity is built on exports and on the euro but if its neighbours stagnate indefinitely, German companies and German living standards will suffer. Not a welcome message for Ms Merkel – but if her own voters turn against her, she may have to do a little turning of her own, in the end.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

The Jenrick Group: Quality Inspector

£20000 - £21000 per annum: The Jenrick Group: This high quality manufacturer o...

The Jenrick Group: Electrical Maintenance Engineer

£30000 - £35000 per annum + pension + holidays: The Jenrick Group: Electrical ...

Recruitment Genius: Photo Booth Host

Negotiable: Recruitment Genius: This company offers London's best photo booth ...

Recruitment Genius: Domestic Gas Service Engineers



£25000 - £30000 per annum: Recruitment Genius: Domestic Gas Service Engineers ...

Day In a Page

Read Next
Elton John and David Furnish finalise their marriage paperwork  

Don't be blinded by the confetti — the fight for marriage equality in the UK isn't over yet

Siobhan Fenton
Freeman, centre, with Lord Gladwyn, left, and Harold Wilson on the programme The Great Divide in 1963  

John Freeman was a man of note who chose to erase himself from history

Terence Blacker
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'