Belgium (Brussels Morning Newspaper), As we approach the decisive trilogue on economic governance on 9 February, the social fabric of Europe is fraying, giving rise to a profound crisis that transcends mere economic challenges. The Commission and the frugal countries refused to learn the lessons from past mistakes, insisting on the same ingredients: a profound fixation on the debt and deficit rules, even if they claim it is a “new recipe” at the end the result will be the same – more austerity! The European Socialists are complicit in this potential economic catastrophe.
To invest or not to invest? The profound inconsistencies of the Commission
The European Commission suffers from a pathological incoherence between what advocates and what it practices. The revision of EU fiscal rules is, unfortunately, just another example of it. In its estimations, recognizes an annual need of up to €520bn to accomplish the goals set in the Green Deal, €100bn for public capital (such as roads or ports), €142bn for social infrastructure (such as schools or hospitals), and €125bn for the digital transition. This amounts to, roughly, 6% of EU GDP.
Therefore, in April 2023, when presenting the new rules two major banners were used: promotion of public investment and “national ownership”, i.e., the possibility for governments to decide on their budgetary options. These are also, largely, the priorities of The Left: public services and respect for democracy. However, looking into the details, the true colors of the Commission start to show.
First, it chooses net primary expenditure as a single variable of adjustment. This was marketed as part of a simplification process of an overwhelming package of rules. In reality, it enforces the political project of austerity: cutting all types of public expenditure indiscriminately. Public services, protection of wages and pensions, and overall labor rights tend to be the first ones to be dismissed. The Troika years have taught this hard lesson to the Portuguese, Greek, Italian, Irish, and Spanish populations.
If the social argument is not enough, public finances also suffer from this blind ideology. Recently, the IMF published evidence that, on average, fiscal consolidation does not reduce debt-to-GDP ratio. Instead, strategic green and social investments promote sustainability and growth and, therefore, revenues to pay out public debt and control government deficit. Furthermore, extraordinary revenues or a well-designed and fair tax system can help with the same goals. Taxing capital and windfall profits is not an empty slogan, but rather an economically sound policy.
Second, the Commission holds the power to impose on Member States a “technical” expenditure path for a period of 4 to 7 years based on its economic forecasts and analysis. Moreover, even if a new government takes power, it is forced to impose the same level of austerity (“fiscal consolidation effort”) as the previous one. Once more, governments elected by the people are being overturned by European technocrats.
Exposing the Hypocrisy: Socialists Backing Destructive Policies
The EP could put forward a truly progressive mandate and challenge both the authoritarian Commission and a Council determined by Germany’s non-realistic safeguards, which are in itself ironic given that Christian Lindner is grappling with the repercussions of its national debt brake illusion.
Instead, S&D, sharing the co-rapporteurship with EPP, decided to support a broad alliance that included liberals and conservatives. Despite the cosmetic changes, deeply inflated by the socialist communication, the EP mandate failed to challenge the inherent problems in the Commission’s proposal.
First, it leaves untouched the austerity logic by maintaining net expenditure as a sole variable of adjustment. The “net” includes more types of expenditure, such as the costs associated with RRF and 25% of co-financing of EU programs, but it rejects protecting what matters: public investment.
Second, mandates the Commission with the power to decide on the technical trajectory, imposing the final expenditure path.
Finally, it enforces an easier way of triggering the first steps of the Excessive Deficit Procedure. To help swallow this pill, a deviation for public investment was included. However, its details show how insufficient it is: it is only for up to 5 years, it has to be aligned with the EU priorities and, even worse, conditioned by the approval of the Commission.
During the trilogue negotiations, facing an even more severe Council proposal, one that pushes for a stricter control account and a prediction of the deficit further than the 3% reference of the treaties, the EP is failing in protecting its citizens.
In the face of rising far-right extremism, the return to austerity and negligence of the pressing social needs will only feed into a regressive Europe, marked by hostility against vulnerable communities, disregard for climate change, and an erosion of democratic values.
Austerity is not an inevitability dictated by economic constraints but a conscious choice. Governments possess the agency to choose alternatives, such as taxing the ultra-rich to fund essential public services. The argument that a country has limited resources and must resort to social spending cuts is a fallacy perpetuated by those unwilling to prioritize the well-being of their citizens over other interests.
It’s time for a resolute stand against austerity and a steadfast commitment to a Europe that values solidarity, social cohesion, and robust public services as pillars of a strong, resilient society.
Opinions expressed in the op-ed section are solely those of the individual author and do not represent the official stance of our newspaper. We believe in providing a platform for a wide range of voices and perspectives, even those that may challenge or differ from our own. As always, we remain committed to providing our readers with high-quality, fair, and balanced journalism. Thank you for your continued support.Sincerely, The Brussels Morning Team