Drama is unfolding across Europe today as Greece swears in a new Prime Minister and Italy awaits Berlusconi’s official resignation. The rising Italian interest rate has meant debts have become uncontrollable for the EU’s third largest economy, and the Senate today approved the drastic austerity measures demanded by the European Union.
It is an extremely worrying time for ordinary Greek and Italian people who are seeing widespread job losses, rising retirement ages, and diminishing standards of living. Sadly it will be these normal hard-working families who bear the brunt of the ‘punishment’ right wing governments across Europe want to inflict on Eurozone members with high debts.
Because we have to remember that it’s not ‘Brussels’ trying to entrench austerity across Europe, it’s the vast majority of EU countries which are run by right-wing parties, and the large number of right-wing European Commissioners we have. Unfortunately the Social Democrats in the European Parliament are at their lowest ebb ever too. The likes of Angela Merkel, Nicolas Sarkozy and David Cameron are in power in Europe, and all think that drastic cuts are the answer to the current crisis.
We can see from our own economy that cuts alone do not work – the UK was recovering strongly up until summer 2010 when it ground to a halt as the Conservative-Lib Dem coalition embarked on its austerity programme. What we really need is to focus on growth and long term solutions for the Eurozone, as well as showing some solidarity with our European neighbours. Because it is clear, if the Eurozone fails, our economy will be dragged down with it. And if we don’t invest in jobs then unemployment, especially among young people, will continue to rise along with our debts.
One way we could generate some capital to invest in our future would be a financial transaction tax, which would ensure that those responsible for the crisis contribute to clearing up the mess. Bonuses continue to be paid out and large profits continue to be made by the financial sector while the rest of society suffers. Support is growing for a global or EU-wide Robin Hood tax, and George Osborne is becoming an increasingly lone voice in opposing it.
Alongside the financial transaction tax, the European Parliament is also looking at Eurobonds. These would allow Eurozone countries to benefit from cheaper loan rates by spreading the risk across all Eurozone countries, preventing excessive debts such as the ones we are seeing in Italy. And Britain must not stand on the sidelines as we negotiate these measures; we might not be in the Eurozone but it cannot be denied that we are all at risk if Greece or Italy defaults.
The right’s answer to the crisis is not working, and we need to make sure the Labour Party and our allies across Europe have a strong voice in fighting for a more prosperous and fair economy.