Skip to content. | Skip to navigation

Personal tools
You are here: Home Breaking news Europe strikes out in austerity drive

Europe strikes out in austerity drive

26 September 2010, 10:34 CET
— filed under: , ,
Europe strikes out in austerity drive


(BRUSSELS) - Radical European plans to fine governments that hide from painful cuts crash headlong into strikes and protests this week as labour leaders flag up the human cost of austerity.

A bid to force the 27 European Union nations to deposit billions of euros with Brussels, that would be forfeited in the event of failure to tighten national spending, will be laid out to finance ministers starting crunch talks on Monday.

Detailed proposals will be made public on Wednesday, when millions are expected to take part in a general strike across Spain and 100,000 protesters are tipped to march against "austerity" in Brussels.

After spring panic about government debts, fears are again rising about bank rescue costs in Ireland and a double-dip downturn in Spain, where one in five remain resolutely out of work.

But while Europe tries to clean up its post-recession books, a backlash has begun among voters focused on vast anticipated numbers of public sector job cuts.

It was clearly seen in Britain on Saturday, where Labour unions, lawmakers and party members handed their leadership to left-leaning Ed Miliband -- in a surprise, last-minute defeat for his better-known, centre-right brother and former foreign secretary David.

"We will demonstrate to voice our concern over the economic and social context, which will be compounded by austerity measures," John Monks, general secretary of the European Trade Union Confederation, said of Wednesday's mobilisation.

Further protests are planned in the Czech Republic, France, Ireland, Italy, Poland and Romania.

The strike in Spain, meanwhile, was called after cuts to public sector wages, retirement and family benefits, with the tipping point of relaxed employment law.

"Let's not focus too much on the size of the sanctions," the spokesman for EU economic affairs commissioner Olli Rehn, who is driving the bid to get tough, said as diplomats told AFP of the plans' scope.

"It's the effectiveness of the proposals we set out next week (that matter)," Rehn's pointman said.

The idea is that states would deposit 0.2 percent of national GDP with the bloc to underwrite moves to get back within deficit and debt ceilings of three and 60 percent respectively.

Practically every EU state has now crashed through the deficit boundary (Spain hit 11.2 percent in 2009).

Offenders would also be ordered to slash total debts by five percent each year for three years, which an EU source warned represents "a considerable effort."

Europe also wants to smooth out cross-border imbalances, with sources also talking of possible fines running to 0.1 percent of GDP for countries that fail to meet targets aimed at bringing up the rear.

Rehn wants the sanctions to kick in semi-automatically, with penalties only avoided if a majority vote against.

Ministers will air their views in a "task force" on cross-border economic governance chaired on Monday by EU figurehead Herman Van Rompuy.

Set up by national leaders, it is due to present its own findings at a summit next month.

The panel has struggled on sanctions so far, with ideas for cutting future aid for poorer regions hitting opposition notably among ex-Communist eastern European states.

"A whole series of points still needs to be resolved," one diplomat stressed.

Document Actions