Economic Guidelines for a Better Union
This report on EU and national guidelines for fiscal balances, commissioned by the Rosa Luxemburg Stiftung Brussels Office, is written at a time when the EU and member state national governments appear determined to make the present highly constrictive fiscal rules, which have heavily contributed to an overall poor economic performance, even tighter.
Despite the fact that the global financial crisis was a crisis brought on by excessive private debt, the EU and its most powerful member states insisted that the answer was to bear down ever more strongly on public debt, imposing rigid austerity and – even worse for the long run – imposing new, ever-more restrictive legal and constitutional limits on governments’ deficits and their public debt.
Since 2008, nothing fundamental has changed in the international financial system, which remains vulnerable – not least since private debt as a share of global GDP continues to rise. We therefore offer our fiscal policy guidelines as a basis for reflecting now on what will prove helpful, or even necessary, when the present ideologically-driven present break down under their own contradictions.
John Weeks & Jeremy Smith