The first news comes from Eurobarometer: in November 2012 the percentage of those who tend “not to trust” Europe is 56% in France, 59% in Germany, 69% in the UK, 53% in Italy – almost doubled compared to 2007, and three times higher in Spain where it reaches 72%.
The second news come from the IMF: in 2013 the euro area will be in recession: minus 0,3%, after a fall that in 2012 was twice as much. While all eyes are on the difficult making of the new Italian government, the third news comes from Berlin: in the next elections in September 2013 a new political force will appear, Alternative für Deutschland, populist and anti-Europe, demanding a return to national currencies. It may not pass the 5% threshold for representation in Parliament, but it will take votes away from the ruling coalition; chancellor Angela Merkel is now likely to lose more from a continuation of the austerity orthodoxy – now hitting the German economy too – rather than from easing up on spending cuts.
The result has been an immediate, unexpected thaw. Announced by the President of the European Commission José Manuel Barroso in person: “We need to have a policy that is right. At the same time we need to have... acceptance, political and social”. Europe’s austerity policy has now reached its political limits. On April 25, a full range of official views were voiced. The EU Commissioner for Economic affairs, Finnish “hardliner” Olli Rehn admitted that, ”consolidation slowdown is now possible”. David Lipton, no. 2 at the IMF, came from Washington to ask Europe to “avoid stagnation”. Victor Constancio, no. 2 at the ECB, confirmed from Frankfurt that budget consolidation may slow down.
At last. Five years of crisis have been addressed in Europe by an ideological obsession made of failed ideas, wrong numbers and nutty policies – such as the Fiscal Compact and the balanced budget written into national Constitutions. Now – eventually – the party of austerity has been defeated by reality, and a timid change of season may arrive.
This - by the way – is an unexpected blessing for Enrico Letta’s efforts to produce an unworkable new Italian government that is likely to include austerity fans, tax cutters and (hopefully) some job creators (see “The youngest face of Italy’s old politics” by Mario Pianta).
We are not yet at a change of paradigm; liberal markets rule, privilege is unquestioned, at the top – in business, banks and politics – no élite change is taking place, finance has the same unrestrained freedom to speculate. In fact, austerity has not been defeated politically, in elections and in the streets; the post-liberal alternative is yet to be built.
There is also another take on such events. Five years of austerity have now produced their intended outcomes – a battered periphery of Europe, a newly profitable finance, workers and unions weakened and divided, power concentrated in Berlin. It is now time for capital to invest again, for business to profit, for politicians to get votes. This timid change of season could well only be enjoyed by the élite.