A referendum on the Brussels consensus?

George Irvin

By George Irvin

Published in EUobserver, 27 May 2005

Those on the French Left who vote non to the Constitution cannot simply be dismissed as loony-lefties, nostalgic for France’s pivotal role in Europe or clamouring against the evils of globalisation and neo-liberalism.

They have a serious point to make about alternative economic visions of Europe. The main Eurozone economies have experienced low growth, high unemployment and shrinking social benefits for the better part of a decade. At present, French unemployment stands at 10%, Germany’s growth was negative in the fourth quarter of 2004, Italy is in recession and the ‘Dutch miracle’ has collapsed. Little wonder voters are disillusioned. Rekindling an economic debate about the future of Europe is an urgent task; it will last well beyond the referendum and needs far wider public discussion.

Economists may agree the Eurozone’s record has been dire, but they disagree about why. The orthodox explanation, popular amongst manyUS-trained economists and often echoed by the OECD, is that Europe suffers from bloated budgets, inflexible labour markets and high taxes. Remove the welfare state everyone will get back to work. The alternative explanation, favoured by post-Keynesians, is that the balanced budget corset imposed by the Stability and Growth Pact (SGP) is paralysing the Eurozone.

Read the whole article at 050527euobserver

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