Today Oxfam published their briefing paper, A Cautionary Tale: The true cost of austerity and inequality in Europe. They describe the enormous suffering and waste that austerity measures have caused both in Britain and elsewhere in Europe. As a mental health professional, I’m particularly disheartened that suicide rates are increasing in the UK after years of decline. They’re also on the increase in Spain. I suspect this tragic increase is a reflection of lower standards of living, greater inequality, higher unemployment and the slashing of public services to help vulnerable people.
Oxfam point out that this is a tale they’ve seen elsewhere.
The European experience bears striking similarities to the structural adjustment policies imposed on Latin America, South-East Asia, and Sub-Saharan African in the 1980s and 1990s. Countries in these regions received financial bailouts from the IMF and the World Bank after agreeing to adopt a range of policies including public-spending cuts, the nationalization of private debt, reductions in wages, and a debt management model in which repayments to creditors of commercial banks took precedence over measures to ensure social and economic recovery. These policies were a failure; a medicine that sought to cure the disease by killing the patient.
They also have some unpleasant predictions for the future.
Austerity measures will have impacts beyond their period of implementation. The Institute for Fiscal Studies predicts that poverty rates in the UK will have increased by between 2.5 and 5 percentage points by 2020, equivalent to 2.7 million more people living in poverty.
Europe could have an additional 15 to 25 million people living in poverty by 2025 if austerity measures continue, equivalent to the population of the Netherlands and Austria combined.
At best, the countries most affected by austerity will become the most unequal in the Western world. At worst, they will rank amongst the most unequal anywhere in the world.
Oxfam point out that austerity isn’t even succeeding on its own terms, with most EU countries seeing their debt-to-GDP ratio go up, not down.
Ireland’s return to growth is often held up as an exception to the above. Yet Ireland potentially offers a window into the future for other EU countries, with reports of high levels of regional income inequality, insecure employment and significantly decreased spending power. Moreover, Ireland is highly dependent upon the state redistributing income through taxes and transfers, a feat which is likely to diminish as austerity measures continue to bite.
They call for an end to this failed approach, arguing that the EU should accept that much of the current public debt is simply unpayable, and should negotiate a restructuring or cancellation of the debts. This should be combined with stimulus programmes, investment in public services, strengthening of democracy and fairer taxation.
You can read the full report here.