CESI-SG: Mixed messages from Brussels in terms of austerity measures

The CESI Secretary General Klaus Heeger raises doubts that the new Fiscal Pact will be more effective than the current Stability and Growth Pact, as recently amended by the Six-Pack.

“Of course, the European Court of Justice is in charge of supervising financial stability now, which admittedly is quite a significant novelty.  Moreover, a sanctions mechanism will be applied in the case of violation of the rules, without requiring a prior Council decision,” Klaus Heeger noted, “but who really believes that the Member States will respect these new rules, especially in times of financial straits? At the end of the day, there are always pending elections somewhere.”

Furthermore, at the Summit itself, the bell was sounded for a move away from the strict austerity measures in place. Just as unemployment stands at its highest level in the Eurozone since 1999 (i.e. when the Euro was introduced), a statement for employment-friendly growth was made on the very same day. In this statement, the “recent measures taken by the ECB as regards long-term lending to banks” are said to “help very much”, amongst other comments.

Fundamentally, in terms of economic policy, the two documents released at the EU Summit are diametrically opposed to each other. While one document calls for new economic stimulus measures, the Fiscal Pact demands sustainable budgets in the Eurozone’s Member States. So the signals sent out by the Summit could not be more ambiguous: harsher austerity measures on the one hand, economic stimulation on the other.    

The fact is, experts agree on the following: further ECB intervention will take place in these times of crisis and high unemployment – in the foreseeable future and long term.

“It hence seems that ECB interventions are seen as a model for success. Of course, CESI, in its role as a European umbrella trade union organisation supports economic stimulation and investments on the job market, however not on the expenses of future generations”, Heeger says.