EU plans brutal austerity across Europe

Portuguese education workers have been striking in recent weeks over staffing, pay and other issues (Picture: @fneduca on Twitter)

Leaders of the  European Union (EU) are preparing to enforce new rounds of austerity on member countries. The plans mean tens of billions of pounds of cuts and attacks on workers.

On Wednesday the European Commission proposed the return of spending curbs that were relaxed at the start of the Covid pandemic. The commission is part of the EU’s executive, made up of one person from each of the 27 states. They aren’t directly elected.

The rules, known as the Stability and Growth Pact, are a mechanism to enforce neoliberalism across a continent. They trap governments is an iron cage of restrictions—and also give them an excuse to make cuts.

The EU says states can spend only 3 percent more than they collect in taxes and other payments. And they insist overall a state’s debts must never be more than 60 percent of gross domestic product (GDP)—the value of all the goods and service produced in a year.

In order to let states shore up banks, firms and capitalism in general, the EU set aside the rules when the pandemic began.

The suspension is set to end next year. And the commission’s proposals would mean that from next year any member state with a deficit above 3 percent will have to slash spending by at least 0.5 percent of GDP a year. This includes slashing health and education. 

Ten member states—including Italy, Hungary, France, Belgium and Poland—have a deficit above 3 percent. They either will have to defy the rules or start planning cuts and tax rises.

States would have to agree cuts with the commission over a four-year period. These would be extendable to seven years if matched with “credible reforms”—a way to make ordinary people pay.

The proposals should lead to workers’ resistance. Esther Lynch is general secretary of the ETUC, which acts as an umbrella for groups such as the British TUC union federation. She said, “The risk of a return to austerity has increased. That would mean fewer jobs, lower wages, less public services and higher poverty.”

The proposals are also stirring up differences between governments. Christian Lindner, Germany’s finance minister, said that the scheme did not do enough to enforce cuts. As a representative of the EU’s biggest economy, he wants to make sure everyone else adopts austerity. French government representatives said the budget regime was too rigid. 

They’re nervous about trying to implement such cuts against a risen people. France’s finance minister Bruno Le Maire said the plan “must be reworked” and he was “opposed to uniform automatic deficit and debt reduction rules”.

Workers should fight to stop any plans for cuts, whether they are from the EU or national governments. And the commission’s proposals underline that the EU is not a friend of workers.