The failure of the European policy

The result of a wrong policy,generally imposed in its main aspects by the European Commission with the objective of a balanced budget.

The politics of the European Union, more precisely of the Eurozone, has had an almost constant trend over the last twenty year. A trend in any case different given that initially they were countries with a different economic and social bases.

The same task of balancing the budget, has been assigned to these countries with their national differences. Economic policy by its nature is not the same over time, it varies depending on the condition of each country, sometimes taking a restrictive line and, alternatively, an expansionary one if the growth trend is low and unemployment is high.

The best-known example is that of the United States, where Franklin D. Roosevelt reversed American policy after the depression of the early 1930s, moving around the middle of the decade from a policy of reducing public spending to the opposite one of increasing spending public with the result of restoring impetus to growth and employment.

It was a policy harshly criticized by the right, as one might expect, but which in the space of a few years led to the resumption of growth, an increase in employment, and the relaunch of American trade unionism.

In Europe, for approximately the last twenty years, the national policy established by the European Commission has  fundamentally been based on balancing the budget of the EU member states. The result is lower growth and higher unemployment.

After an oscillating trend characterized by low growth and averagely high unemployment, growth is currently hovering between a level below zero and slightly above. It is no coincidence that Germany, the leading country of the European Union, characterized by low debt and high growth,  has recorded growth below zero in the last two quarters.

An elementary evaluation tells us that this is the result of a wrong policy, generally imposed in its main aspects by the European Commission with the objective of a balanced budget regardless of the changing trend of the economy at a national and supranational level. A trend by its nature changeable.

The European government is the result of an aggregate of representatives of the different countries that form the Union without anyone being responsible for the policies and results of the countries of origin.

This doesn't mean there's a lack of policy. The opposite is true, in the sense that the economic policy of each country must be based on balancing the budget (in principle, on the surplus), on the reduction of public spending on investments and on support for less well-off families.

The stability of this policy would be surprising and, essentially, unacceptable, if it did not have at its base a solid support provided by the relatively small social class interested in the steadiness of the currency, in this case the euro - a stability unprecedented in the monetary history of the various countries.

In other words, a wealthy social class that benefits from exchange rate stability while lower growth is reflected  on employment levels, and law wages and  job instability.

The low growth of some of the major eurozone countries is no mystery., It particularly concerns Spain, Italy and Greece and, to a lesser extent, France itself. It did not affect Germany which has - or had in the phase of introduction of the single currency - a high export capacity independently of domestic growth keeping, in any case, a particularly large and developed industry as in the case of steel, chemistry and automotive production.

A policy based on the principle of stability and reduction of public spending, regardless of the national situation, has no comparison in contemporary history. United States policy is indicative in this sense if we consider that for two years Biden has increased public spending in favour of investments and families with the result of higher growth (calculated at 2.8 in 2023) together with an increase in employment.

The reduction in growth in eurozone countries is accompanied by the growth of inequality and poverty. It is no coincidence that, in Italy, the South has seen both a reduction in growth and an increase in poverty. With a particular feature. The consequences of this policy being low growth and greater inequality.And it has not found an obstacle in left-wing governments, subordinate to the European Commission, concerning the public budget, public investments and labour market. 

Is it a policy without possible alternatives?
The future is not easily predictable, but the crisis of current European politics is fully evident. And with next spring's European election the current situation could change together with the change in the majorities that control the national policies.

Historically dominant Germany is grappling with a declining national income after sixteen years of growth under Angela Merkel's government. In France, Macron governs with uncertain support in Parliament – He has changed the head of government choosing the young  Gabriel Attal.
But a majority of the far right led by Marine Le Pen, together with a part of the left, is believed to be   the possible new government after the next national elections.

In Italy, for the first time, a right-wing policy, characterised by duplicity compared to the policies of Brussels, must face, together with Greece, the highest public debt in the European Union. Debt that cannot be reduced without a growth policy based on public investments, capable, in the medium term, of reducing the percentage of debt in relation to growing national income. Precisely the policy prevented by the European Commission. Ultimately, a growth policy that we have seen practiced by the American government and, at times, by the Japanese government - the third country after the United States and China in terms of national income - despite having a public debt just under double that of Italy.

Anticipating the future is always risky. But the judgment on the present should be clear. The current European policy is a failure, if we consider consequences of its implementation by the European Commission, in substantial accord with the national ruling classes, on the countries which follow (or are obliged to follow) it.

Antonio Lettieri

Editor of Insight and President of CISS - Center for International Social Studies (Roma). He was National Secretary of CGIL; Member of ILO Governing Body and Advisor for European policy of Labour Minister. (