Austerity policies meant to turn around the European economy and reduce the debts and deficits of countries like Italy, Portugal, Spain, and Greece continue to have the opposite effect. The continent’s economy shrank for the second consecutive quarter in the three months leading up to September, officially pushing the European economy back into recession. The 0.1 percent contraction marked the fourth consecutive quarter that the European economy either shrank or experienced no growth.
Protesters filled streets in Lisbon, Madrid, Rome, and Athens this week, as austerity policies in all four countries have driven up unemployment and led to social service cuts, while failing to address the economic crisis. The protests have taken a violent turn recently, with protesters setting fire to urban streets and riot police firing back on them. 140 were arrested in Spain, where the unemployment rate has jumped above 25 percent. The economies of other struggling countries also continue to decline:
Portuguese unemployment jumped to a record 15.8 percent while in Spain, one in four of the workforce is jobless.
Greece’s economic output shrank 7.2 percent on an annual basis in the third quarter as the debt-laden country staggers towards its sixth year of depression.
Close to 26 million people are unemployed in the European Union while governments cut spending.
A study recently found that rather than increasing growth and reducing debt, austerity was driving down economic growth and increasing debt levels. Others have shown that austerity has put 116 million Europeans at risk of falling into poverty.
The United States has fared better, largely because it embraced stimulative economic policies instead of rampant budget cutting. But the U.S. is now at risk of following a similar path, as the so-called “fiscal cliff” policies that will slash spending would inflict an even larger austerity package on the American economy than any European country has pursued. This week, 350 economists called on Congress to avoid budget cuts and instead focus on investments into infrastructure and education that would stimulate growth and create jobs.