European austerity “contagion”

Governments across Europe are starting to implement austerity measures. Gavin Hewitt, the BBC’s Europe editor, even talked of “the contagion of austerity” in a blog post on the subject.

Italy is the latest to join the trend with the announcement of a €24 billion (£21 billion) austerity package. It follows others including Britain (see 23 May post), Greece, Ireland, Portugal and Spain. Germany looks set to start moves towards cuts next month while France will be announcing a cost-saving pension reform.

While in some countries, particularly the larger ones, the cuts announced so far are relatively small and symbolic in others they are already more savage. Estonia, for example, went through a severe period of austerity in a desperate bid to qualify for eurozone membership.

Other articles which have discussed the trend have appeared in Der Spiegel, Eurointelligence and the Wall Street Journal.

There is certainly substantially more austerity to come but the exact scale will depend on how fast the different economies grow. The balance between spending cuts and tax rises is also open to question – but both represent a form of austerity.