Janssen, R. (2014) “Why Austerity Is Contagious“, Social Europe Journal, 27 Οκτωβρίου.
Austerity is contagious: The case of France
France is finding itself between a rock and a hard place. On the one hand, with 54% of companies reporting in the third quarter 2014 that they find activity constrained by a lack of customers, the main problem is clearly on the side of demand. On the other hand, its government has clearly abdicated from using fiscal policy to support aggregate demand and is in fact trying to do the opposite by further cutting public expenditure.
Here, it’s not just the pressure from the Commission and the Stability Pact that is pushing France further down the road of austerity. It is also and most importantly the fact that France cannot risk not to keep up with the pace of austerity as pursued by its trade partners.
The latter has to do with the fact that the deficit and wage cuts in Spain, Italy and Portugal depress domestic demand in these countries. However, their domestic demand constitutes at the same time the export markets for goods and services made in France. As a result, French exports to these countries go down, thereby also worsening the balance of external trade of France. The graphs below document this in detail and show how, in each case, exports from France have fallen over the past years and this in a systematic and continuous way.
Σχετικές αναρτήσεις:
- Afonso, A., Zartaloudis, S. & Papadopoulos, Y. (2014) “How party linkages shape austerity politics: clientelism and fiscal adjustment in Greece and Portugal during the eurozone crisis“, Journal of European Public Policy, 29 Οκτωβρίου.
- Durden, T. (2014) “Remember Europe’s “austerity”, or rather as we dubbed it, fauxterity?“, ΘZeroHedge Blog, 24 Οκτωβρίου.
- Stiglitz, J. (2014) “Europe’s Austerity Disaster“, Social Europe Journal, 29 Σεπτεμβρίου.