Wayne David MP, shadow Europe minister, and Glenis Willmott MEP, Labour’s leader in the European Parliament
Yesterday David Cameron patted George Osborne on the back as, yet again, he downgraded the growth forecasts for the British economy. Today Mr Cameron is in Brussels to export Mr Osborne’s policies of deep economic retrenchment to our European neighbours.
At the European Union Summit all eyes will be on possible differences between European Leaders over Libya, and because of this there could well be little reportage of the hugely significant “economic governance package” and the proposed EU Treaty change.
This is extremely worrying as there is a real danger that these measures will do little to put Europe on the road to a strong economic recovery and do little to create the jobs which are badly needed. Mr Cameron is set to sign up to a treaty change that will enable a permanent bail-out mechanism for eurozone countries.
The need to get a permanent mechanism in place is clear, but the changes to be agreed this week have raised concerns amongst progressives who are worried they are indicative of a wider approach, led by right-wing governments, that is completely insufficient to address Europe’s deep-seated economic problems.
Austerity, rapid economic retrenchment policies and fiscal consolidation will not of themselves create the kind of growth that the eurozone desperately needs. Some may choose to shrug their shoulders at this fact, in the naive belief that this is only of concern to people over the channel or the Irish Sea. But this matters to us because our own economic growth depends on the success of our European neighbours.
If all EU countries cut back at the same time, growth is likely to be sluggish at best. The hardest hit countries could find themselves facing stagnation, or even another recession. The risk is low economic growth and high long-term unemployment. And of course it will be the poorest countries that will suffer the most.
With right wing parties in a majority in most EU countries, it is becoming increasingly clear it will be the less well-off who will pay the biggest price for the global financial crisis. As in the UK, the focus of EU policy making is on cuts. Cuts to minimum wages, cuts to pension provision and cuts to welfare benefits – and, as in the UK, it is hard to see where policy makers expect growth to come from.
Throughout most of Europe, economic recovery is far from strong, and there is little evidence that private sector job growth will be fast enough to compensate for the huge number of jobs lost in the public sector. The political and economic philosophy underpinning the stability mechanism will make economic recovery in the eurozone both fragile and uncertain.
On Saturday people will march through London in their thousands calling for an alternative to the cuts that are being forced upon us by Mr Cameron’s government; we must ensure their message is heard in the corridors of power not just in London, but Paris, Berlin and Brussels too.