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Ronald Zak/AP

Barroso: Austerity is 'fundamentally right' - but is approaching its limits

The European Commission president says, however, it is an ‘unacceptable prejudice’ to blame some countries for others’ problems.

THE PRESIDENT of the European Commission has said economic austerity policies being pursued across Europe are ‘reaching their limits’ – but insisted that the policies are fundamentally correct.

Jose Manuel Barroso told an event in Brussels that while he remained assured of the merits of austerity policies – where governments pursue rigorous cost-cutting in order to minimise the amount they must borrow – they would only work if the public understood those merits.

“It has to have the minimum of political and social support,” Barroso said, saying a working policy would need “the ways, the means of its implementation and its acceptance, the acceptability, political and social.

“This is where I think we have not done everything right,” he said – saying the European institutions had met with resistance from the public because they had not been able to illustrate what was at stake by failing to implement tough spending cuts.

This led to an “unacceptable prejudice” where countries were happy to blame others, and the European authorities, for economic problems of their own making.

“The idea, in some of our Member States, the states in the periphery [...] that the problems they have, they have not created it, that it was created by someone – probably Berlin or the European institutions, or the IMF … it was not created by the others,” the former Portuguese premier insisted.

But also the other prejudice that exists in some of the, let’s say, central countries or more prosperous countries, that there was some kind of inability of the people from the periphery or from the South, that some of these people are by definition lazy or incompetent.

And this is a deep problem. It is intolerable, morally unacceptable.

Asked whether his remarks indicated a softening of Europe’s position where austerity would be pursued less vigorously, Barroso said the European Commission’s policies had never focussed solely on austerity.

“Without confidence, we have no investment. And without investment there is now growth. But our response to the crisis, our policy proposals, has always been a comprehensive response,” he said.

That is why we need to combine the indispensable – I underline, indispensable – correction of the disequilibria in public finances: namely huge deficits, huge public debt, fiscal rigour. This is indispensable.

We need to complement this with proper measures for growth, including short term measures for growth, because we know that some of those reforms take time to produce effect [...] but it has to be complemented by a stronger emphasis on growth and growth measures in the shorter term.”

Read: Goodbody: Ireland should have second bailout ready to help exit from first

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