Europe shifting away from economic austerity
NEW YORK TIMES
BRUSSELS -- Unemployment has surpassed Great Depression-era levels in southern Europe. Recession is drifting to the once resilient economies of the north. Even some onetime hawks on government spending say they cannot cut any more.
After years of insisting that the primary cure for Europe's malaise was to slash spending, the champions of austerity, most notably Chancellor Angela Merkel of Germany, find themselves under intensified pressure to back off unpopular remedies and find some way to restore faltering growth to the world's largest economic bloc.
On Friday, Prime Minister Mariano Rajoy of Spain, who once promoted aggressive budget cuts, became the latest leader to reject European Union targets for reducing deficits.
That is one of several developments -- a recent court ruling against job cuts in Portugal, a new, austerity-averse prime-minister-in-waiting in Italy and mounting doubts among Europeans and even the International Monetary Fund -- that have forced senior officials in Brussels to acknowledge that a move away from what critics see as a fixation on debt and deficits toward more growth-friendly policies is necessary.
"There has been a clear shift in thinking," said Guntram Wolff, a German economist who has worked at the European Commission and is now acting director of a Brussels research group.