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Friday, October 04, 2013

Are the Irish more optimistic about an austerity cure for Europe than the Germans?

A new Gallup poll for Debating Europe has asked peple all over the EU, except Luxembourg for some reason, about their views on austerity.

Now, of course, 'austerity' is rather a nebulous concept, particularly as different member states have had different experiences, while deficit cutting and structural reform all fall under the same term. Nevertheless, there are some interesting results.

The table above (click to enlarge) shows that across Europe as a whole, 51% said austerity is not working, while 34% said it is working but will take time, and 5% were sure it is already working.

Clearly, there are differences across the member states. No surprises that Greeks (80%) and Cypriots (64%) are the most sceptical about the merits of austerity. Portugal and Spain are also towards the right hand, anti-austerity side of the scale.

But look at Ireland. According to this poll, more Irish respondents (53%) think that austerity is working than Germans (42%), Finns (40%), or Dutch (39%)  - whose governments are considered to be the eurozone's most hawkish.

It is also striking that people from the new member states in central and eastern Europe, albeit outside the eurozone, have the most trust in austerity policies. The Baltics (Latvia, Lithuania and Estonia) in particular were subjected to significant austerity in the aftermath of the financial crisis yet many in these countries still support such an approach.

It is not clear what exlpains Irish optimism about austerity. It is likely to be a mixture of the fact that, so far, the Irish economy has made relatively good progress (although fears about the banks and property market still remain) and a general cultural disposition - as we noted in a paper last year, of all the struggling eurozone countries Ireland has the economic and social setup and history most likely to fit with the austerity approach.

But taken as a whole, this poll highlights the political and social scale of the challenge the eurozone faces with its current policy approach, particularly among the populations of Southern Europe.

1 comment:

Rik said...

The South simply has completely outdated structures for the modern world economy and the EMs have simply caught up with them 9and are much cheaper).

2. Plus Ireland has more taken the bull by the horns. Basically the restructuring in the South is a big joke (also the EU plans for it btw). It is not only price. Wages would have to get to 400-800 USD level (probably even lower to kickstart). You simply cannot live on that with he prices they have. Add a 50% eating government to that and you see how ridiculous that is. Training/Education/Skills wise they do hardly anything.
Simply a failed project.

3. What is at least as interesting is that in countries that have had a shock event the idea that it will never be the same as before as you donot make those few steps extra yourself has taken ground.
More than in the core North and absolutely more than in the dysfunctional South.
The North of the former East block and ireland also have known relative poverty in the lifetime of most (unlike say West Germany, Benelux etc).

4. How I see it. Basically as an idication how long it will take that the Europeans will wake up. And it looks pretty awful to be honest.
I always expected Germany, Holland and Co making a real turn in time to get ready for aging and the period when China and Co will be able to compete with them. The South including France tbh I had written off from the beginning of the crisis simply not the stomach for change.
However what we see here and in German and say Dutch politics in general (UK as well btw) is that people are more focussed on who should pick up the bill for the extra costs of the welfarestate that is in its present form unsustainable anyway and how to continue the former lifestyle as long as possible than making things work for the future.
Holland is rising taxes now 50% plus from 22K and 60% from 70K if I am not mistaken. Germany possibly /likely will rise the toprate over 50%. Simply hardly looks sustainable simply looks mainly only pluggng holes and start new inefficient projects.
UK still has a massive deficit that 'creates' still only marginal growth. Bring the deficit back to zero and it is still substantially recessive.

5. In a nutshell.
-It likely shows that there needs to be a shock event for change and a big one. Euro crisis itself and the South going belly up was not enough apparently. They have to experience that themselves aswell.

-South is beyond salvation. For those that didnot know yet.
But the North is also moving in the wrong direction, simply playing ostrich. Which is a bit unexpected.

-South simply becoming something not to be touched even with a pole (EU wise). And the North hardly something to put your money on. Rest being to small to be really interesting as a growyh market at least. Remains however interesting for several decades simply because of its size. Looks something the UK should take with it in the EU evaluation. Being in the right neighbourhood at the right time is 80% of being successful as a company. Hard to see it being different for countries. And the EU hardly seems to be the future growth market. Impossible to leave but you simply have to look around actively for other partners if as a country you want to keep growing economically. Simply caught up in the wrong neighbourhood.
And buy a good burglar alarm as well, you know how things go with 'hoods'.