An end to ‘stupid’ austerity?

Has Europe finally decided to make a stand for intelligence and mutual trust? Hopes that this is the case have been inspired by the European Commission’s surprise decision to grant France an additional two years in which to rein in its public spending deficit to less than 3 per cent of GDP. The austerity target no longer has to be achieved in 2013, or indeed in 2014, but not until 2015.

In the runup to the announcement, Paris was hoping for a more modest postponement of one year, once it had given notice that it would not able to respect the commitment undertaken by Nicolas Sarkozy and later confirmed by François Hollande.

However, the Commissioner for Economic and Monetary Affairs, Olli Rehn, decided otherwise. Having judged that the effort required to stay on course for a 3 per cent deficit from next year was on a scale too great to be credible, he postponed the deadline until 2015 so as to ensure that hopes for recovery would not be nipped in the bud. In exchange, he demanded that the French government accelerate its efforts to push through reforms and to reduce public spending. The Commission and Europe’s member states have finally put an end to a role playing game which has undermined any attempt to ensure good governance of the economic and monetary Union, and brought the euro to the brink of disaster.

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