Why growth is now a one way road for Eurozone

José Manuel Barroso, President of the European Commission, and several Members of the College of the EC received in Brussels François Hollande, President of the French Republic. The main item on the agenda, what else than, economic growth. (EC Audiovisual Services).

José Manuel Barroso, President of the European Commission, and several Members of the College of the EC received in Brussels François Hollande, President of the French Republic. The main item on the agenda, what else than, economic growth. (EC Audiovisual Services).

Eurozone trade in goods with the rest of the world in March 2013 left a record surplus of €22.9 billion, according to an announcement released by Eurostat, the EU statistical service. Yet the single euro money area is stuck in a long-term recession and high unemployment trap, without visible prospects for an exit. Francois Hollande, the French President speaking in Brussels at a joint press conference with the Commission President Manuel Barroso, said his country, the second largest economy of Eurozone, recorded a net loss in production and incomes during the first quarter of 2013 and added, that recession affects now many Eurozone countries. He explained that this is not the outcome of lack of confidence towards Eurozone, because confidence is high and interest rates are low. Hollande conclude that what is missing relates to concrete growth measures and reminded everybody that the Growth Pack agreed at the EU leaders Summit of June 2012 must be given flesh and blood the soonest possible.

Returning now to trade, the record surplus of Eurozone in March has to be attributed to a decrease of imports and an increase of exports. Eurostat says that, ”In March 2013 compared with February 2013, seasonally adjusted (Eurozone) exports rose by 2.8% while imports fell by 1%.” This is another proof that Eurozone’s main trade partners, the US, China and more developing countries are right to strongly complain that Europe is not doing enough to fight its internal recession, which is holding down the rest of the global economy.

Criticising Eurozone

The 17 country euro money zone accounts for around 17% of the world economy. Its trade partners insist that Eurozone cannot count any more on exports to keep its economy alive and has to do much more to strengthen internal demand, increase its imports and show to the rest of the world that it cares for the common good, by contributing to global growth. Presently Eurozone is the only major economic area of the world stuck in recession while the developing economies are growing robustly and the US are doing their best to maintain a positive GDP trend.

As a principle imports from another economy add to its growth potential, while exports are undercutting it. If the trade surplus of Eurozone with a country is positive, the money zone ‘steals’ growth potential from its trade partner. In detail now according to Eurostat, “The EU27 trade surplus increased with the USA (+€13.5bn in January-February 2013 compared with +€12.1bn in January-February 2012), Switzerland (+€10.9bn compared with +€7.9bn) and Turkey (+€4bn compared with +€3.2bn). The EU27 trade deficit declined with China (-€25.6bn compared with -€26.6bn) and Norway (-€7.4bn compared with -€10.7bn), and remained nearly stable with Russia (-€17.8bn compared with -€18.2bn)”.

In conclusion Eurozone during the January-February 2013 period either increased its trade surplus with its main partners or decreased its deficits. In both cases the euro area gained growth potential at the expenses of partners. This is a direct result of Europe’s insistence on policies of severe fiscal consolidation, which lead invariably to recession and increases of trade surpluses. The world would not  tolerate any more Germany to suppress Europe and not care about the rest of the globe.

Teutonic control on labour market

Germany is the country paradigm of this kind of economic policies, applying them for at least five to six years now. On top of that, all along that period this country used a peculiar mechanism to hold down real wages in both, the private and the public sector. In so doing Germany can actually manage its competitiveness in a unique way, probably by centrally controlling the ‘free’ negotiations for wages and salaries between trade-unions and employers. This almost invisible and probably ‘underground’ system of labour market control doesn’t exist in any other western democratic country.

For five to six years now, wage and salary earners in Germany keep losing every year a good part of the their real take home pay, yet they don’t strike nor they demonstrate, neither they show their anger at least not as strongly and vividly as in every other European democratic country. Of course one may argue that in those things there are national characteristics, which play a decisive role. In this case the argument must be that the Germans are very good in taking orders and obeying their leaders, when they ask for more austerity. This helps the country’s political leadership to have an easy job to do in supporting the employers’ classes to get richer and richer.

In any case whatever the national characteristics of the European Peoples are, convergence has a meaning also in the cultural and ideological chapters. Unfortunately Madame Merkel doesn’t help towards this direction, while praising the German miser attitude and blaming the Mediterranean people for carelessness in a deeply divisive narrative. The German Chancellor is constantly doing more harm to the European project, by translating everything to the direct and uncovered interest of her country.

Speaking yesterday in the West Germany Radio (WDR) she said that “the right solution for the unemployed youths of the South is to travel and look for a job in Germany”. Is it possible that she cannot understand how negative such an incitement sounds, to the ears of young Greeks, Italians, and Spaniards? Does she really believe that the emigration of a good percentage of the Mediterranean populations to Germany, can solve the labour market problem? And is this country ready to accept all of them? Where? In camps as in the 1950s?

‘Ralaxationists’ gain ground

In any case the opposition against the ‘Teutonic austerity’ from the European ‘relaxationists’ is taking momentum. Manuel Barroso speaking yesterday in Brussels said that the Commission may extend the fiscal adjustment period beyond the two years already accorded to some Eurozone member states (France, Italy, Spain, Greece, Portugal, Ireland). In this way those countries will reduce their deficits to acceptable levels, under a more relaxed procedure and in a longer time horizon. Understandably this will greatly help them to grow. Then the President of the Commission went to Berlin, where he used the same kind of arguments, encouraging this time Germany to adjust wages to (growing) productivity in this country. Both those Barroso remarks are aimed at the same target, that is to help Eurozone grow.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Medical deserts in the European Union: the practicalities of universal health coverage

The European Parliament rewrites the EU budget in a bright day for the Union

Three ways the world must tackle mental health

Prevent future crises and empower youth – now!

Indigenous peoples ‘lag behind on all social and economic indicators’: UN deputy human rights chief

What is carbon offsetting?

3 ways China is using drones to fight coronavirus

The importance of collaboration in the digital economy

Poor quality is healthcare’s silent killer. Here’s what we can do about it

Europe split in confronting the US sanctions on Iran, Washington isolated

Could implants treat people with brain disease? A young scientist explains

“A divided Europe is not in China’s interests”, Ambassador Zhang of the Chinese Mission to EU welcomes Brussels

Clean energy will do to gas what gas has done to coal

Why Italy will not follow the Greek road; Eurozone to change or unravel

4 key steps towards a circular economy

EP President at the European Youth Event: “Your ideas are key in shaping EU’s future”

Prospect of lasting peace ‘fading by the day’ in Gaza and West Bank, senior UN envoy warns

Elections results: Austerity’s black to prevail in the new multicolored German government

EU trade agreements: delivering new opportunities in time of global economic uncertainties

Eurozone: Even good statistics mean deeper recession

State aid: Commission amends Short-term export-credit insurance Communication in light of economic impact of coronavirus outbreak

India can soar in the robot age. This is how

Refugee crisis update: Commission still in panic while Turkey is to be added in the equation

Why Eurozone can afford spending for growth

Cities are easy prey for cybercriminals. Here’s how they can fight back

Girls still being treated as aliens in medicine in the 21st century

Parliament commemorates the victims of the Holocaust

New identity cards deliver recognition and protection for Rohingya refugees in Bangladesh

FROM THE FIELD: ‘Blue’ finance flows in the Seychelles

It’s down to cities to limit global warming to 1.5°C by 2030

How blockchain can manage the future electricity grid

CEOs as activists: should leaders speak up about social causes?

Aid convoy for north-east Syria postponed over security concerns – UN relief chief

Parliament approves €104.2m in EU aid to Greece, Spain, France and Portugal

On the 22nd China-EU Summit: “negotiating partner, economic competitor and systemic rival”; is this the right EU approach to address your 2nd biggest trading partner?

China’s cities are rapidly becoming more competitive. Here’s why

Austerity lovers and ‘relaxationists’ fight over the EU budget

Protection of workers from biological agents: how to classify COVID-19

First 17 “European Universities” selected: a major step towards building a European Education Area

Guinea-Bissau spotlights threats of organized crime, Sahel terrorism in speech to UN Assembly

These 5 foods are under threat from climate change

5 ways companies can support their remote workforce

Number of members in Parliament’s committees to change after Brexit

North Sea fisheries: MEPs back EU plan to sustain stocks of demersal species

How I met the Panda Woman

Global leaders must take responsibility for cybersecurity. Here’s why – and how

How smartphones can close the global skills gap for billions

How climate change exacerbates the refugee crisis – and what can be done about it

Why informal networks will be key to the COVID-19 recovery

Eurozone slowly but surely builds its Banking Union

New EU rules cut red tape for citizens living or working in another Member State as of tomorrow

Assembly of European Regions @ European Business Summit 2014: Made in Europe – Made of Regions

5 reasons why biodiversity matters – to human health, the economy and your wellbeing

Development aid drops in 2018, especially to neediest countries

These are the countries with the highest inflation

Nuclear weapons in Lithuania: defence against Russia or target for terrorists?

This young activist explains how to change the world in 3 steps

UN chief welcomes announcement by Emir of Qatar to allocate $50 million to support Syrian refugees, displaced persons

Civilians suffering due to sanctions must be spared ‘collective punishment’ urges UN rights expert

World Food Programme accesses Yemeni frontline district for first time since conflict began

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s