Opinion

Paul Taylor

Europe’s austerity-to-growth shift largely semantic

Paul Taylor
May 28, 2013 16:17 UTC

To listen to some European leaders, especially in France, you would think the era of austerity was over and the euro zone was going full steam ahead to revive economic growth. In a striking change of tone, European Commission President Jose Manuel Barroso said last month that austerity – the policy of cutting public debt by reducing spending and raising taxes – had reached the limits of public acceptance.

In reality, the shift is more in words than deeds. The rhetoric has changed but there has been no policy U-turn.

To be sure, the European Commission is granting governments more time to reduce their budget deficits to EU limits, chiefly because recession had made those targets unattainable. Euro zone states have a breathing space because bond markets have ceased to panic since the European Central Bank said last year it would act decisively if necessary to preserve the euro.

The EU emphasis is now on reducing “structural deficits” – an elastic measure meant to take account of the economic cycle – and on reforming labour markets and pension systems, opening up more sectors to competition and easing business regulation to improve countries’ growth potential.

Small initiatives are in the works, amid great political fanfare, to combat the scourge of mass youth unemployment which threatens southern Europe with a lost and alienated generation.

Egypt under IMF spotlight as loan talks resume

Paul Taylor
Apr 3, 2013 16:07 UTC

CAIRO, April 3 (Reuters) – An International Monetary Fund
(IMF) team resumed long delayed negotiations with Egypt on
Wednesday on a $4.8 billion loan to ease a deepening economic
crisis in the most populous Arab country.

After two years of political upheaval, foreign currency
reserves have fallen to critically low levels, limiting Egypt’s
ability to buy wheat, of which it is the world’s biggest
importer, and fuel.

President Mohamed Mursi’s government signed a preliminary
deal with the IMF in November but postponed ratification in
December due to unrest ignited by a political row over the
extent of Mursi’s powers.

Analysis: Germany sees itself as Europe’s grown-up, children sullen

Paul Taylor
Apr 1, 2013 07:37 UTC

BERLIN (Reuters) – Buoyed by solid finances, roaring exports and low unemployment, Germany increasingly sees itself as the only grown-up in Europe, responsible for bringing wayward children into line to hold the family together.

The children are not enjoying it. Some, such as the Cypriots and Greeks and many Italians and Spaniards, are openly resentful of “Mutti” (mum), as Berlin officials privately call Chancellor Angela Merkel. Others, such as the French, are sulking.

The mood among German politicians and officials is one of economic self-confidence tinged with a sense of parental duty to provide the euro zone with stiff-backed leadership, even if that makes them unpopular in Europe.

Q&A-What next after Cyprus bailout?

Paul Taylor
Mar 26, 2013 17:12 UTC

BRUSSELS, March 26 (Reuters) – In bailing out Cyprus and
taking funds from savers instead of taxpayers, the euro zone has
crossed a Rubicon with implications for future banking rescues
in other countries despite assertions that the crisis in the
island nation is unique.

CYPRUS: ONE-OFF OR TEMPLATE?

Eurogroup Chairman Jeroen Dijsselbloem caused uproar in
financial markets by saying in an interview with Reuters and the
Financial Times that the Cyprus solution gave a flavour of how
Europe would handle future bank crises, by making banks solve
their own problems rather than using European taxpayers’ money.

Finnish Prime Minister Jyrki Katainen supported him, saying
that “bail-in” thinking should guide a planned European banking
union, but clarified that he did not necessarily mean depositors
should be hit in future.

Analysis: “Lex Cyprus” will set precedents for closer EU union

Paul Taylor
Mar 23, 2013 17:37 UTC

BRUSSELS (Reuters) – Lawyers have a saying that hard cases make bad law.

Whatever happens this weekend on a bailout for Cyprus will set precedents for the euro zone’s future banking union, investor confidence in the single currency area and political relations among European states.

Europe’s political leaders, and their finance ministers, are having to decide in practice at breakneck speed on issues on which they have not yet agreed in theory.

Among those issues is whether euro membership is really irreversible for all member states, or only for countries deemed systemic, and what the true meaning is of the European Union’s agreed guarantee of 100,000 euros in bank deposits.

“Lex Cyprus” will set precedents for closer EU union

Paul Taylor
Mar 23, 2013 17:30 UTC

BRUSSELS, March 23 (Reuters) – Lawyers have a saying that
hard cases make bad law.

Whatever happens this weekend on a bailout for Cyprus will
set precedents for the euro zone’s future banking union,
investor confidence in the single currency area and political
relations among European states.

Europe’s political leaders, and their finance ministers, are
having to decide in practice at breakneck speed on issues on
which they have not yet agreed in theory.

Europe’s social shock-absorbers show crisis strain

Paul Taylor
Mar 18, 2013 20:39 UTC

PARIS (Reuters) – Grigoris Lemonis, a 73-year-old Athens pensioner, uses his 580 euro monthly state pension to support his wife and the family of his son, an unemployed cook with two small children and a wife who works occasionally as a cleaner.

Three-generation families surviving on a single income are increasingly common across southern Europe as mass unemployment tears at the fabric of closely knit societies.

The continent’s social shock-absorbers are creaking under the strain of a prolonged economic crisis that began in 2008 and engulfed the euro zone in a sovereign debt crisis from 2010.

Analysis: Europe’s social shock-absorbers show crisis strain

Paul Taylor
Mar 18, 2013 06:59 UTC

PARIS (Reuters) – Grigoris Lemonis, a 73-year-old Athens pensioner, uses his 580 euro ($760) monthly state pension to support his wife and the family of his son, an unemployed cook with two small children and a wife who works occasionally as a cleaner.

Three-generation families surviving on a single income are increasingly common across southern Europe as mass unemployment tears at the fabric of closely knit societies.

The continent’s social shock-absorbers are creaking under the strain of a prolonged economic crisis that began in 2008 and engulfed the euro zone in a sovereign debt crisis from 2010.

Analysis: Italy’s Grillo blazes trail for Europe’s populists

Paul Taylor
Mar 8, 2013 13:09 UTC

PARIS (Reuters) – Italian comic-turned-activist Beppe Grillo has blazed a trail for populist political movements around Europe by taking his Five Star Movement (M5S) from obscurity to become Italy’s largest party in its first general election campaign.

Grillo’s stunning success in turning a fringe protest group into a national force while refusing to be interviewed on television or debate with mainstream politicians may be studied by political scientists and campaign operatives for years.

Populists hostile to the euro or to immigration have ridden a wave of anger over austerity, recession and unemployment to make inroads from the Netherlands to France, Finland and Greece since the financial crisis began in 2008.

EU needs ‘who lost Italy’ debate on austerity

Paul Taylor
Mar 4, 2013 10:16 UTC

BRUSSELS (Reuters) – European policymakers should be asking themselves “who lost Italy” after a grassroots revolt against austerity, unemployment and the political elite caused an electoral earthquake in the euro zone’s number three economy.

Instead, most are insisting that their policy mix to fight the currency area’s debt crisis is right, even though the latest EU forecasts have pushed any prospect of meaningful economic recovery in southern Europe back into the middle distance.

A surge in support for anti-euro populist Beppe Grillo and the surprise resurrection of former Prime Minister Silvio Berlusconi on an anti-austerity platform in last week’s election have plunged Rome into political deadlock.

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