French declare end to “austerity dogma.” Reuters: “The European Commission on Friday gave France two more years to meet its budget deficit target because of the country’s poor economic outlook within the recession-hit euro zone. ‘This is decisive, it’s a turn in the history of the European project since the start of the euro,’ Moscovici told French radio Europe 1 in an interview. ‘We have witnessed the ending of a certain form of financial austerity and the end of the austerity dogma.'”
Europe is only pretending to give up austerity, warns FT’s Wolfgang Münchau: “A good example of the new PR-based anti-austerity strategy came in speeches last week by Enrico Letta, Italy’s new prime minister. He railed against austerity, but at the same time emphasised his commitments to Italy’s fiscal targets, as if the two were somehow unrelated … If the eurozone were serious about a U-turn on austerity, the only effective way to accomplish this would be for the creditor countries to expand their fiscal positions during the recession. The opposite is happening.”
Britain’s austerity plan makes even less sense than before, finds Paul Krugman: “…even if you believe that markets would be unnerved by some relaxation of short-term fiscal austerity … how is this spike in long-term rates supposed to happen? … Osborne’s case for keeping on the path of harsh austerity isn’t just empirically implausible, it appears to be a complete conceptual muddle; they just haven’t thought this thing through.”
