Wisdom of austerity quietly questioned at EU summit

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France and Germany look set to be at loggerheads during the summit after deficit disagreements. Photo: Maurizio Gambarini/DPA

Is the age of austerity tip-toeing to an end?

It's probably extremely hard to believe for those living with the cuts and consequences but four years after the start of the Euro Crisis that question is starting to be asked in Brussels. No one's saying it very loudly yet but, as leaders meet at the European Council later today, whether austerity is working is now being mulled over.

Officially this summit is about growth and how to stimulate it through structural reform. That’s EU speak for finding ways to create more employment within the 27 countries of Europe and reduce barriers to trade. But with a growing public anger and disillusionment – demonstrated most recently in Italy – slow, fragile growth and rising unemployment, there is a concern that something may need to change.

“If you could generate growth through discussions we’d have an awful lot of it, ” one EU insider told me yesterday, adding:

People have looked at the Italian election and it’s made them question: 'What if this is replicated?' It is now making people question austerity.

And that’s what’s likely behind draft conclusions for the summit which seek an appropriate mix of expenditure and revenue measures including a determination to boost growth and jobs, particularly for the young. There may also be movement on EU targets for state deficit cutting as France becomes the latest to miss its target.

It’s a slow process, but one which is gaining popularity. The same advisor added:

There’s a growing view that austerity may not be the way forward. There are going to have to be big discussions on how to deal with the current state of low growth.

We’ll probably stick to the existing measures but with greater flexibility to try and improve lost economic output. The problem will come when it comes to deciding how much we stick and how much we loosen.