EU attacks 'optimistic' economic outlooks

[pampango]

Source: BBC



The European Union has criticised the UK and other European nations for having "optimistic" growth assumptions and bloated deficits.

The UK must tackle "uncertainty" in plans to cut its deficit, the EU said. EU rules say government deficits must be below 3% of GDP, but the UK's deficit is expected to hit £178bn - or 12.6% of GDP - this year.

It warned Germany, France, Spain, Italy and the Netherlands that they were all over-reliant on seeing a healthy economic recovery in order to meet debt reduction targets.

And, as was reported earlier in the week, the report warned that the UK was not on course to cut its deficit in line with EU rules by a deadline of 2015. In the run-up to next week's Budget, UK chancellor Alistair Darling has defended the government's approach to the deficit, arguing that cutting it too quickly by reducing government spending would risk harming the UK's emergence from recession.

Read more: http://news.bbc.co.uk/2/hi/business/8572149.stm

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For comparison's sake, the US budget deficit is 10.7% of GDP (http://www.usgovernmentspending.com/downchart_gs.php?year=2000_2010&view=1&expand=&units=p&fy=fy11&chart=G0-fed&bar=0&stack=1&size=m&title=US%20Federal%20Deficit%20As%20Percent%20Of%20GDP&state=US&color=c&local=s) and public debt is 53% of our GDP (http://en.wikipedia.org/wiki/United_States_public_debt).

[LongTomH]

1. Does anyone else see "The Shock Doctrine" in action for Europe here?

Europe has had a relatively egalitarian culture, without a huge gap between rich and poor. This looks to me like the same sort of 'intervention' that Naomi Klein detailed in her book: The Shock Doctrine: The Rise of Disaster Capitalism. The MO was identical in South America, the Former Soviet Union, Asia, South Africa, and New Orleans: Exploit a crisis to justify privatization of public wealth and cutbacks in social services (and thus, the 'burden' of taxation on the rich!).

Ms. Klein is also a contributor to a new book: People-First Economics: Making a Clean Start for Jobs, Justice and Climate.