European economy reaches crisis point: Robert Oulds

It’s in absolute crisis situation that Europe now finds itself in as a result of the Euro – the European Union’s single currency; and of course the austerity measures, which cut back public expenditure at a time when it’s needed to stimulate economic activity." An analyst says massive debt accumulation combined with public spending cuts has deteriorated some European economies to the point of absolute crisis. In the background of this the EU has warned its member states that continued imposed austerity measures could lead to social distress that might result in a public backlash. Also an anti-austerity party won Italy’s elections last month, which has sent chills to pro-austerity government’s in the Euro Zone. Press TV has interviewed Robert Oulds, Director of the Bruges Groups from London about this issue. The following is an approximate transcription of the interview. Press TV:How serious is this issue of the backlash may be coming at this point? Oulds:It’s very serious. We see in Italy people have rejected the pro-austerity parties, the parties that are supporting cuts in Italian public expenditure while supporting tax rises. We’ve seen many protests already on the streets of Greece and Spain and of course Portugal continues to suffer with economic problems. Recently, within the last few days the European Union has had to bail out Cyprus. But what they’ve done at the same time is of course take money from Cypriot banks. They’ve actually taken money from these bank deposits of individuals. So, in effect they’ve stolen the money from pensioners, people that are working, savers in Cyprus - another Euro Zone country that is also suffering and that will create a massive backlash because taking money directly from people’s bank accounts is of course, well, some would consider that theft. Press TV:I’ve heard the argument made by people who are pro-austerity that essentially people have been living the easy life so far and that now the part is over and they need to tighten their belt so to speak. How do you respond to that? Oulds:They haven’t been living the easy life in southern Europe. Countries like Italy as a result of the Euro haven’t had economic growth in over a decade. So they haven’t been living generous lifestyles. In fact, the Euro has actually been hurting them - that’s one of the reasons why these countries have so massive debts is because the euro has hurt their economies and the only way to keep their countries going was to build up massive account balance deficits by borrowing more money just to keep money flowing into the system. But now of course they are effectively bust. So they have been suffering economic harm, which has resulted in the massive deficits they have now and now of course the problems are just getting even worse, creating an unemployment crisis across southern Europe - even France is beginning to suffer now. And of course in Spain we have a whole host of problems, which are culminating in people losing their homes, having their houses repossessed because they can no longer afford to pay the mortgages. It’s in absolute crisis situation that Europe now finds itself in as a result of the Euro - the European Union’s single currency; and of course the austerity measures, which cut back public expenditure at a time when it’s needed to stimulate economic activity.