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Unease persists in Europe

india Updated: Sep 28, 2010 23:02 IST
Pramit Pal Chaudhuri
Pramit Pal Chaudhuri
Hindustan Times
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The British Labour Party moves to the left. Sweden and the Netherlands move to the right. The conservative governments of France and Germany are wildly unpopular. But so are the leftish governments of Spain and Greece. The EU is anything but united when it comes to political trends.

However, there is a broad economic reality underlying much of this. Europe was hit hard by the global financial crisis. The rickety budgets of many eurozone governments were exposed, as was the over-dependence of economies like the UK on financial services.

Now Europe is under the reform gun. The Spanish labour markets, German wage costs, Greek accounting rules — all are being refurbished.

Cutting government expenditure during a recession seems to fly in the face of textbook economic practice. But this is the new reality. The world is still flush with capital. The new rulebook is to use it to get the private sector growing. The UK’s conservative government understands this and has laid out a plan to savagely shrink the state.

In the short term this is hurting the lower classes the most. The workers’ anger is spreading across Europe. In Sweden, it has helped propel right-wing anti-immigrant parties. In Britain, it has made the Labour party distance itself from the “third way” propounded by Blair. Expect more pain. The ride has just begun.

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