Mick Wallace (Wexford, Independent)

I note that yesterday, the EU statistics office, EUROSTAT, released figures showing a collapse in household spending, exports and manufacturing that has taken the life out of the eurozone economy in the final months of 2011. Output within the eurozone shrank by 0.3% from the third quarter. Government cuts, increasing indirect taxation and rising unemployment are having a devastating effect on many parts of Europe and there is little doubt but that austerity will neither spur growth nor boost employment. One did not really expect it to so do and it is disingenuous to try to suggest it will. Many problems exist with regard to the structure within Europe and if European monetary policy is run according to German interests, structural imbalances will remain. In this context, why do the Germans not drive up wages, increase domestic consumption and import more? That would help to even out some of the Continent's imbalances and would be more productive in the long term than driving austerity down the necks of the countries on the periphery.

This austerity is so devastating that I note the Spanish Prime Minister this week stated that Spain would not meet the 4.4% target but was aiming for a target of a deficit of 5.8%. Moreover, he did not announce this at the Council meeting last Friday but stated it was none of the Council's business as it was a sovereign matter. That is interesting and could be a new development. Moreover, the Dutch, who have been one of the cheerleaders for austerity, now acknowledge they will not reach the deficit target of 3% over the next three years. Instead, they predict deficits of 4.5%, 4.1% and 3.3% in 2012, 2013 and 2014, respectively. Will the Dutch be fined because they are going to break the rules? Fines are supposed to be imposed on them.

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