Strikes a barometer of Europe's austerity tolerance

 
A worker stands at a picket line at Mitrena shipyard, south of Lisbon A picket line at a shipyard in Portugal as the country observes a strike in protest at austerity measures

Across Europe people are taking to the streets to express their anger and frustration with austerity.

There will be disruption and protests. General strikes have been called in Spain and Portugal, and there will be action in Greece, Italy, Belgium and France.

The day will serve as a barometer of the mood in Europe.

Is it increasingly angry? Or just resigned?

The question that worries many of Europe's leaders is when will patience run out? When will tolerance of high unemployment and declining living standards snap?

The eurozone's strategy still holds. Deficits must be reduced. Structural reforms - such as the opening up of labour markets - are the key to future growth.

Countries must regain their competitiveness with Germany by slashing wages and pensions.

The European Commission believes that austerity may hurt growth in the short term, but in the longer term it will revive confidence in Europe.

It remains a hugely controversial policy. There are those who say it has failed in Greece.

There, the economy has shrunk by 23% in five years. Many economists insist it is madness to continue with austerity when so many southern European countries are already in recession.

Spain has an unemployment rate of 25% and is in recession. In five of its 19 regions, unemployment stands at more than 30%.

Yet the government in Madrid is embarking on another round of spending cuts that will only further weaken demand.

The human cost of those policies has been underlined in the past two weeks by two suicides linked to the repossession of homes.

Unemployment rates

  • Spain 25.8%
  • Greece 25.4%
  • Portugal15.7%
  • Eurozone 11.6%
  • France 10.8%
  • US 7.8%
  • Belgium 7.4%
  • Germany 5.4%
  • Japan 4.2%

Eurostat

The protesters will march behind the slogan, "They are taking away our future".

The Greek prime minister, while pushing austerity measures through parliament in recent days, has also said he accepts his country is facing the equivalent of the Great Depression.

Austerity-lite

Recently, the IMF conceded it had underestimated the impact of austerity on living standards and there are signs of greater flexibility in the eurozone.

Deficit-cutting targets for Spain, Greece and Portugal have been eased.

Brussels is said to have moved towards an "austerity-lite" policy, but the fundamentals stand. Southern Europe has to reduce its deficits and debts.

The key question remains; how will growth be restored?

Without it, Europe faces a future of hardship. German Chancellor Angela Merkel has said the eurozone crisis may last five years.

She has just visited Portugal, where she praised the sacrifices being made and promised that one day the "painful" changes would be positive, but she was booed during her visit.

A youthful generation may not be prepared to accept unemployment at more than 50% for five years or longer.

In the past three months the eurozone crisis - as reflected by the markets - has eased. The economic outlook, however, has worsened.

Wednesday's day of action will be watched closely to gauge Europe's mood.

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    -1

    Comment number 38.

    You can't clear debt by creating more debt

  • rate this
    0

    Comment number 37.

    The German orthodoxy imposed on the EZ is dogmatic and shortsighted, but the alternative to simply revert the policies of austherity is unrealistic if that means a revival of carefree public spending. The pressure on the soverign debt of South Europe by the financial markets is real. A balance between opposing needs require an original approach whose means can be devised only along the way

  • rate this
    +1

    Comment number 36.

    Cannot see how we can all go back to pre-2008 so that "everyone lives happily ever after".
    Far too much bad blood on both sides. Politicians in all countries have been economical with the truth.
    The Euro is an economic and social pressure cooker built to help the strong at the expense of the weak, and the pressure is building. Unlikely that the Euro will survive in its present form...

  • rate this
    +5

    Comment number 35.

    On the 10th Dec, we will get a reminder of how far removed EU leaders are from the people. They are invited to Oslo to collect their 'peace prize'. This you will recall was awarded because of all the peace & democracy throughout Europe. There is a beautiful irony in that the person most likely to accept the award has not been elected by a single person in Europe.

  • rate this
    0

    Comment number 34.

    26.Jason

    Greece should be seen in proportion.Go back 8 years ( 4 of it before the financial crises ) and you can see that EU was enlarged
    and 100 million joined the EU.So even when Greece defaults there are in average 10 countries left almost in the same size.
    And 1 to 10 is not a good ratio for Greece

  • rate this
    0

    Comment number 33.

    #27 omni

    "Despite any "lessons" ?

    the atrocities committed by the right against the left -- There were 1289 murdered, 31,632 tortured, 30,000 imprisoned and many raped as well as the looting and destruction of property.

    Thousands of leftists were executed. 50,000 imprisoned and tens of thousands were exiled to remote islands.

    http://www.greektravel.com/greekislands/makronisos/

  • rate this
    +1

    Comment number 32.

    People say austerity isn't working, but I'm still waiting for it to start! In the UK, for example, govt spending before and after the crisis is pretty much the same.

    It's the 'private sector' that creates jobs and, as painful as it would be in the beginning, the govt has to return the money it's taking from the private sector to create real growth and jobs.

    It's not going to happen yet though

  • rate this
    +7

    Comment number 31.

    For the record, Hitler was nominated leader by a senile president convinced nazism was the only defence against Communism. The big speeches, etc., were carefully choreographed and the cheering crowds carefully selected. Hitler was not brought to power by the desperately poor, but appointed as a saviour by the desperately rich.

  • rate this
    0

    Comment number 30.

    There is a technical way out for Greece (and for other countries too) and one that has historical precedent: return to the Drachma. To do this the country will have to default allowing the 'new' currency to find its value.

    No similarly constructed single currency has ever worked and has always ended in grief and sometimes war. The remedy is some pain now or much worse later.

  • rate this
    0

    Comment number 29.

    This is the effect a 'protest' has in Brussels - looks a lot like a strike to me

    http://wp.me/p2yZNK-zc

  • rate this
    +1

    Comment number 28.

    The BBC should ask Ai Weiwei to advise Greece on its problems as Damian Grammaticas seems to think the artist is the authority on China's economic reforms. How about getting Wayne Rooney to oversee the BBC reforms?

    The BBC are becoming a joke, no wonder foreigners see us as irrelevant meddlers.

  • rate this
    +1

    Comment number 27.

    Gavin,

    You know as well as most sane people where this is going to end.

    Adolf Hitler did not emerge because he was a particularly nice man. He saw a desperate people crushed, with little or no hope for the future.

    Despite any "lessons" learned from history, sooner or later someone will emerge that offers the same vision of salvation (with perhaps many of the same brutal acts).

    EU fiddles...

  • rate this
    +1

    Comment number 26.

    Personally I'm surprised that Greece hasn't had its own arab spring-like uprising. Sure they brought most of this on themselves but there is no prospect of them now being able to grow their way out of it. Private lenders have taken a haircut on Greek debt, the ECB should do likewise or Greek should just default.

    Would the British accept a 40% cut in wages/pensions & 25-30% unemployment?

  • rate this
    +2

    Comment number 25.

    #18 KURGAN

    " When this nothing to loose point is reached organisations like Golden Dawn will herald a return to what happened in Germany with the rise of the Nazi party in the 1930's."

    --False analysis !

    -Greece has NEVER left its Civil War mentality -- and its accompanying denials.

    --THAT is what is now coming again to the surface -- as the Societal ´Free Lunch´ parasitical dreams end.

  • rate this
    +5

    Comment number 24.

    "If Greece reverted to the Drachma, what would change for Greece?"

    Greece would then have a currency reflecting the state of its economy, rather than the seriously overvalued currency it now has.

    Clearly that in itself wouldn't solve Greece's problems, but it's better to have a properly valued currency than to have the burden of a weak economy entirely falling on the unemployment rate.

  • rate this
    0

    Comment number 23.

    To keep the € together, I feel Germany will have to put it's hand in it's pocket to pay for economic stimulation in the PIGS. This will not happen without closer fiscal and political European integration, which will take decades to achieve. Therefore, if Germany does not want to do this, then Germany should leave the eurozone, and if this happens, the deflation in

  • rate this
    0

    Comment number 22.

    When will Germany wake up and realise that Merkel is throwing their money and future into a bottomless pit.

    The same goes for us in the UK except we at least, are not loosing as much as Germany - yet.

    Greece will never be able to repay Germany.

  • rate this
    -1

    Comment number 21.

    "When will tolerance of high unemployment and declining living standards snap?"

    This is an insidious and false idea. Countries don't "snap" from economic failure. Rather, they rot. They decay softly, and with great odor. They snap when foreign powers sponsor armed rebellion. Then they go bang.

    If the standard of failure is Europe snapping, the EU can never fail. If rot, it has already failed.

  • rate this
    0

    Comment number 20.

    Still can't see how the troubled south can survive the euro longterm without permanent direct transfers instead of loans.
    Presumably there will be depopulation as people look for work, just holiday homes for the northern europeans.
    Not quite sure what's in it for Greece

  • rate this
    0

    Comment number 19.

    The problem is they are all self defeating economic policies that lead to an unstoppable downward spiral. - even if you have money and a job, as the future looks so uncertain you also rein back on your spending.

    What we need is investment to create jobs, but who wants to invest under the current economic conditions.

    Spain IS competitive now, and has a MORE flexible labour market than Germany

 

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