Poverty will be entrenched in Europe for a generation if there is no change in the policy of cuts, reports Dick Skellington.
The report A Cautionary Tale: The true cost of austerity and inequality in Europe assessed the likely impact of austerity on poverty levels in the UK, and extrapolated it across the 27 European Union member states. It concluded that relative poverty, defined as the number of people living below 80 per cent of median income, could rise by a minimum of 15 million, and even as high as 25 million, within 10 years.
The IFS compared the current swathe of austerity impacts across most of Europe to the devastation wrought by the 'structural adjustment' programmes which were imposed on poor countries by the International Monetary Fund twenty-five years ago. Back in the 1980s countries in economic difficulty had to cut public spending in return for loans at high interest, a policy which failed nations in Asia, Africa and Latin America, and according to Oxfam, 'cured the disease by killing the patient'.
"The European model is under attack from ill-conceived austerity policies sold to the public as the cost of a stable, growing economy, for which all are being asked to pay. Left unchecked, these measures will undermine Europe's social gains, creating divided countries and a divided continent, and entrenching poverty for a generation," says the report.
Oxfam, responding to the shocking findings, urged European financial leaders to adopt a radical agenda of: progressive taxation in order to ensure that the wealthy paid their fair share towards the cost of public services; a greater emphasis on investment stimuli; and protection from spending cuts, especially in health and education provision.
The findings come amid rumours that Greece, which is in a dire economic state and is mired in political unrest, will soon require a new rescue package worth over $10 billion.
The IFS believes that the solutions to national debt crises ravaging Europe have been too strident. Swingeing public spending cuts, mass privatisation and market reforms, the price for receiving bail-outs from the IMF and their European neighbours, have not resulted in much progress economically. Rather the deals have destablized democracy and impoverished the weak and vulnerable.
In many countries youth unemployment is producing a lost generation. Oxfam commented: 'the only people benefiting from austerity are the richest 10% who have seen their share of income rise whilst poorest have seen their share fall. The UK, Greece, Ireland, Italy, Portugal, Spain – countries that are most aggressively pursuing austerity measures – will soon rank amongst the most unequal in the world if their leaders don't change course."
In a separate report, Child and Working-Age Poverty from 2010 to 2020, the IFS reveals that in the UK the impact of changes to personal tax and benefit policy announced by this coalition government will be to increase relative child poverty by 200,000 in both 2015-16 and 2020-21, and to increase relative poverty for working-age adults by 200,000 in 2015-16 and 400,000 in 2020-21. The changes are also forecast to increase absolute child and working-age adult poverty.
All in all a very bleak picture in Europe unless austerity measures are relaxed.
Dick Skellington 22 October 2013
The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.