Brexit“ and ”austerity“ are two of the most controversial subjects of recent times. Brexit is a political challenge stemming from an EU membership referendum; austerity is an economic challenge stemming from the political short-sightedness of pro-cyclical policies. But both phenomena have a direct effect on businesses and households across the European Union.
The Brexit vote, and Euroscepticism more generally, have come together with lengthy and hotly-disputed austerity policies in some countries to burden Europe’s economic revival by limiting the
influx of private money into the economy. The uncertainty caused by both Brexit and austerity is a key reason for the ineffectiveness of the European Central Bank’s quantitative easing policies. But how do Brexit and austerity interrelate? And what economic challenges can be expected from the referendum result?
One major impact relates to the EU’s multiannual financial framework (MFF) – for both the current (2014-2020) and next planning period. When Article 50 is invoked, the negotiations around and adoption of the 2021-2027 MFF will become more stressful and challenging than before. The withdrawal of Britain’s contribution will give greater power to net contributors and reduce the opportunities for net recipients. The decades of success stories that arise from EU funding is the primary argument for Structural Funds and the Cohesion Fund. The fundamental importance of an
influx of capital into smaller, peripheral economies is visible in the Baltic states, and elsewhere too. Ireland may, yet again, be one of the best examples. Small newcomers to the EU rely on financial assistance – help that would otherwise have to be found in national budgets or on international bond markets. This alternative would invariably create new pressures and calls for austerity, meaning spending cuts to long-term projects such as preventive healthcare or fixing structural unemployment.
Should the Brexit negotiations result in a swift removal of contributions from the UK, we may even see austerity pressures and a sudden need to redistribute fiscal capacity away from projects
financed under the 2014-2020 MFF. The current British input to the EU budget is substantial. With the European project on a less-than-stable footing at the moment and the economic recovery not
as fast as had been hoped, expecting ad hoc contributions from other member states to make up the missing funds resulting from Brexit appears to be wishful thinking.
Two other aspects are trade relations and financial market interdependence. Both could lead to prolonged or re-introduced austerity policies in EU countries. The operations of British financial service providers in other EU members (and vice-versa) will need to be addressed during the renegotiation process. The relocation of financial services and workers will bring shifts in tax revenue streams, and some countries could lose out. The high degree of mutual exposure to financial services, along with the economic uncertainty and currency fluctuations that the Brexit referendum has brought about, are set to cause damage to national budgets and limit the room for fiscal manoeuvring.
This is most evident for trade in goods and services. Austerity measures will have to be undertaken because of falling trade – not only real, but projected. The UK’s economy is closely tied to those
of other EU member states. Many of these countries – including my own – could suffer or are already suffering losses due to the result of the referendum and the depreciating pound sterling. Falling
export values and smaller tax revenues from exposed industries are already affecting planning for 2017 national budgets.
These are the current and most immediate consequences of Brexit for the macroeconomic situation and budgetary planning. Additional costs could come from possible infringements of the free
movement of labour and the resulting social expenses required for repatriated families.
So does Brexit mean a stricter and more prolonged period of austerity is necessary for Europe? The uncertainty of Brexit has already reduced private and public spending. But this won’t turn into a fully-fledged austerity in all EU member states if the situation is politically managed and economic uncertainty contained. The EU’s leadership may well need to find a way to implement, not only
talk about, policies that will push Europe’s economy towards much stronger growth.
IMAGE CREDIT: duallogic/Bigstock.com
The post Welcome to Austerity 2.0 appeared first on Europe’s World.
Ich freue mich, Ihnen meine herzlichsten Glückwünsche zu Ihrer Wahl zum Bundespräsidenten der Republik Österreich übermitteln zu dürfen. Im Namen des Europäischen Rates und auch persönlich wünsche ich Ihnen in Ihrem Amt als Präsident viel Erfolg.
In einer Zeit, in der wir vor zahlreichen schwierigen Herausforderungen stehen, ist es auch künftig von entscheidender Bedeutung, dass Österreich weiterhin konstruktiv dazu beiträgt, gemeinsame europäische Lösungen zu suchen und unsere europäische Einheit zu wahren.
Can Europeans learn anything from America’s experience with immigrants?
Mike Ungersma argues there is much to be gained.
What happens if we place a drop of red dye into a beaker of clear water? Do we have clear water plus a spot of red dye? Obviously not. We have a new coloration to every molecule of water. That is what I mean by ecological change. A new medium does not add something; it changes everything. In the year 1500, after the printing press was invented, you did not have old Europe plus the printing press. You had a different Europe.
Neil Postman, Amusing Ourselves to Death
While the American media theorist and cultural historian, Neil Postman, was talking here about the impact of television, he could just as easily been referring to the greatest sociological experiment in modern history: the mass migration of millions of Syrians, Afghans, Somalis, Nigerians and countless other nationalities into Europe. Moreover, it’s an experiment that is not happening in a laboratory, posed in a seminar room or offered up in a lecture hall, but actually taking place in an extraordinary short space of time on the streets and in the neighbourhoods of virtually every European city. No one knows what impact this remarkable event will have. What we do know is – depending on your point of view – communities and their character are changing as a result, with their very essence under threat, or, they are being infinitely enriched by ethnic and cultural diversity while their economies benefit from low-cost workers and an injection of new, highly trained professionals. Whatever the true effect, this is a wave of mass migration on a scale Europe previously saw only during two world wars.
There is no need to rehearse the amazing numbers, statistics from a variety of migration ‘watchers’ showing how London, Paris, Rome, Berlin, Athens – never mind hundreds of smaller towns and even villages – are experiencing a rush of new arrivals who bring with them novel and even unknown religious, cultural, ethnic and linguistic differences and practices. This societal change is tidal, unprecedented and challenging, causing many to wonder whether old, long established beliefs and familiar surroundings will be altered beyond recognition.
Europe’s economic ‘pull’ is magnetic and compelling. There is the undeniable attraction of the welfare state and good jobs. There is affordable housing in poorer areas in host communities away from the hostility of more affluent neighbourhoods. Sympathetic support awaits migrants from countless voluntary agencies and charities, willing to not only assist in finding a place to live, learning the local language, locating schools and medical help, but also acting as a buffer from prying bureaucracy and rapacious landlords.
Historically, wherever people are free, they choose to live ‘among their own’, a truism that is even reflected among immigrants themselves. Wherever they end up, they almost always elect to live with ‘their own’ – or – for a variety of reasons, are forced to do so. Familiar faces that speak the same language are welcome indeed when one is faced with upheaval and displacement. This is why Paris has its banilieues, London its Chinatown, Berlin its Turkish ghettos, and the the Roma are coerced into segregation in almost every host European country just as they were in their home nations.
Still another truism seems to be that this extraordinary state of population flux and historic movement in Europe shows no sign of ending. As long as there are impoverished and desperate migrants and refugees who can find a way to prosperous Europe, they will come.
This phenomena is, however, not new. Substitute the United States for every mention of Europe in the myriad of news stories about the ‘migration crisis’, and you have a more or less perfect fit, albeit a century or even 150 years earlier. Remarkably, perhaps, substitute Roman Catholic for Muslim, and the parallel is striking. Take, for example, this excerpt from one of many editorials in the Louisville Journal by its editor, George D Prentice, who was alarmed by the influence ‘foreign’ immigrants – especially Catholics – might exert in the upcoming election for Kentucky’s state governor:
Rally to put down an organization of Jesuit Bishops, Priests, and other Papists, who aim by secret oaths and horrid perjuries and midnight plotting to sap the foundation of our political edifices — state and national.
It was August, 1855. Clearly not all of the ‘huddled masses’ – the inscription that was later to adorn the Statue of Liberty in New York Harbour – were welcome in the ‘Land of the Free’. Prentice was far from alone in his concern. Charlie Hebo’s calculated irreverence toward France’s millions of Muslims was more than matched by the repeated insults hurled at the latest wave of 19th century immigrants to America by the ‘No Nothings’ – a offshoot of the early Republican Party. While the movement disappeared as a political force, its anti-immigrant policies deeply infected the American body politic.
Irish immigrants were a favourite target. Here is a cartoon from the satirical magazine Puck in 1889 showing the legendary American ‘melting pot’ working for everyone but one Irishman who stands aside holding a knife, waving the flag and demanding to be accepted.
“The Mortar of Assimilation And The One Element That Just Won’t Mix”.
German Catholics were similarly regarded.
The Syrian, Afghan, Iraqi and African refugees streaming into Europe since 2015 have roiled its politics and tested its tolerance. In 19th century America, the vast waves of immigrants pushed politics further and further to the right. In every single decade from the 1870s to the present, the American Congress felt the need to respond with legislation, sometimes welcoming immigrants and but more frequently, restricting the flow. The ‘crisis’ created a rollercoaster of action and reaction, what has subsequently been regarded by historians as a surge of populism. When they were manifestly needed, the bar to immigrants was lowered. When the need subsided, the welcome was suddenly withdrawn. The Civil War was an example. Some historians argue the outcome of that costly conflict might have been very different were it not for the 500,000 German and Irish immigrants who served in the Union Army. Not all were volunteers however, and their forced conscription into ‘Lincoln’s Ranks’ touched off violent protests in New York in the summer of 1863. Ironically, the Irish vented their frustration on the city’s blacks whom they felt threatened their jobs following the emancipation of southern slaves. Unlike wealthier Americans who could literally buy a substitute when faced with draft, the Irish were swept up into the ranks in number which were far disproportionate to the Irish population.
Nearly a century later, with millions of young American men off fighting in Europe and the Pacific, the country welcomed Mexican ‘braceros’ to work the fields and farms. Meanwhile, tens of thousands of blacks fled from poorly paid agricultural employment in the South to work in wartime northern mills and factories, a mass internal migration of unprecedented levels. Most resided in ghettoes, and to this day, American cities live with the consequences. Similarly, the Chinese were welcomed as ‘coolie’ labour during the 19th century’s rapid push to connect every major American city by rail. But when the ‘Golden Spike’ was driven and the Trans-Continental Railroad complete, Congress expressed its gratitude to the thousands of Chinese workers upon whose backs the task was made possible by passing the 1882 ‘Chinese Exclusion Act’, which not only barred further Chinese immigration, but forbade those already there to apply for citizenship. Most were left unemployed, to fend for themselves in an increasingly hostile America. More recently, Hispanics, always present in America in numbers that continue to surprise Europeans, had arrived in the country by their thousands, and not just from Mexico. Now their presence is altering the face of American politics and has pushed blacks down the ranking of ethnic minorities.
Europeans, representatives of an ancient culture that bequeathed so much to America, are not accustomed to thinking of the US as a role model, except perhaps in technology and enterprise. But the experience of Americans dealing with wave after wave of immigration, of seeking to integrate disparate peoples into a still-expanding and developing democracy, may have lessons for Europe, and especially the European Union as it grapples with the influx of millions of invited and uninvited refugees and economic migrants. What can be learned?
Some lessons are self-evident. Given the mix enveloping Europe’s shores, count on disruption at virtually every level of society. In the US, the country at least had the advantage of trying to accommodate people of a broadly similar background – largely expatriates of democracies with an historic Western Judaeo-Christian heritage. Apart from a small injection of anarchists, communists and convinced socialists, immigrants to America were content to leave political ideologies behind. Most were driven by the opportunities they perceived available. Much potentially divisive baggage was left behind. While they may not have been uniformly and heartily welcomed, the US they encountered – at whatever period – was not alien and strange. Hence, a ‘Clash of Civilizations’ seems unlikely in any foreseeable American context, but Europe?
Secondly, America benefits from almost impenetrable natural borders. With the exception of Mexico, migrants to America faced a very difficult and costly journey to Ellis Island’s immigrant reception centre in New York Bay, the gateway to 12 million immigrants to the United States for more than 60 years. Europe’s borders are easily overcome, virtually impossible to patrol and a subject of fierce political disagreement.
Thirdly, if the American experience is a guide, expect even more unsettling turmoil. Echoing the movement in 19th century America, the drift toward populism across Europe, as well as the discontent and discomfort many feel about their new neighbours, will be exploited and used by opportunists in every nation. That certainly was the case in America. The cost of ignoring rising public feeling in this regard has already been paid in Britain, where the precipitous and disastrous ending of the government of David Cameron is a alarming warning recognised in every chancellery in Europe. As the Scottish-born historian Niall Ferguson argued recently:
Populists are not fascists. They prefer trade wars to actual wars: border wars to military fortifications. The maladies they seek to cure are not imaginary: uncontrolled migration, widening inequality, free trade with unfree countries and political cronyism are all things that millions of voters have good reason to dislike. The problem with populism is that its remedies are in practice counterproductive.
Finally, the plaintive pleas of those who feel ‘We Can Do This,’ may be misjudging the magnitude of the task. It is more than 150 years since Abraham Lincoln’s Emancipation Proclamation that freed three million black Americans from servitude. In spite of decades of positive, energetic, forceful legislation and immense civic effort – not to mention the election of a black President – this thorny and difficult issue of integrating a minority remains unfinished.
Europe, like Sisyphus, has a mountain to climb and a very large boulder barring the path.
The post Adrift on a Sea of Cultures appeared first on Ideas on Europe.
Les auditeurs de la 2ème session « Enjeux et stratégies maritimes » se sont rendus à Toulon pour leur 2ème séminaire les 4 et 5 novembre ...