The Move Towards Austerity in Europe
At the recent G-20 meeting in Toronto, President Obama warned the other governments present that moves to make dramatic government spending cuts to reduce deficits may in fact push their economies back into recession. However, the move towards austerity is gaining steam in Europe. The BBC has produced a table of the 27 EU member states and their governments’ fiscal austerity measures. According to this website, only two EU countries have not instituted austerity measures—Finland and Sweden. The Nordic countries come out as the most economic secure, as Denmark and Estonia join Finland and Sweden as having the top economic status, according to the BBC.
However to demonstrate the strength of the austerity movement, the BBC suggests that Sweden will need to tighten its spending once the recession ends, even though the Scandinavian country’s deficit in 2011 is predicted to be 1.6% of GDP and debt will be 42.1%. Given that no other EU country is expected to have a deficit of less than 2.2% of GDP, one might wonder if the austerity drive is becoming too strong. Even the Economist ran an article saying that austerity may not promote growth. The article also pointed out the Sweden implemented its own austerity package in the 1990s and then boomed. While Sweden may still have to eventually make cuts, at least it is reaping the rewards of previous reforms now, as other countries are making budget cuts in less than ideal circumstances.