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THE STATE OF THE EUROPEAN UNION
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introduce some flexibility into the rigid principle of budget stability and
broaden the Commission’s interpretative capacity in that respect. It will be
beneficial for countries such as Italy, France and Spain, in other words,
three of the biggest states in the Union. However, despite that, public in-
vestment in the euro zone in 2015 will be equivalent to 2.7% of GDP, that
is to say, 18% below the US level and 25% below Japan (European
Commission figures).
Another example of change is the ECB’s decision to implement a mas-
sive debt-purchase programme, in a departure from so many years of ster-
ilely conservative monetary policy, facilitating the devaluation of the euro.
The Union went too far with fiscal adjustment and now it has been
forced to climb down, without wanting to admit its mistake –a mistake
that has resulted in most of the countries in the Union having a lower per
capita GDP than they had before the onset of the crisis (2% lower in the
euro zone), and a higher public debt.
The Union is now at the heart of the global economic group (Europe,
Asia and Latin America) that is suffering from the malaise of stagnation in
production and trade. The emerging countries have caught it (China re-
ported its lowest percentage growth since 1990: 7.4%; industrial output
in Japan fell by 3.4% in early 2015). The OECD has said that the world’s
economy grew by 30% over the last seven years, a percentage point be-
low the average in the 15 years prior to the crisis. In the OECD alone, there
are 11 million more people out of work than in 2007. That is why opinions
like those of the G20 that are predicting global growth for the coming
years sound like wishful thinking when we see that public and private debt
on the planet have increased by $57 trillion since the onset of the crisis, in
other words, by 286% of the world’s GDP (according to the McKinsey
Global Institute, 2015), and deflation has spread like a plague.
The political response has to be global and it has to be one of public
and private investment, of exogenous stimulus, not austerity as the only
medicine until the patient ends up malnourished. Nor is monetary policy
the only remedy, which is what the European Union has been using over
the last few years, to the point of negative interest rates set by the central
banks in some countries (Sweden and other Nordic banks).
Such a response is the right one in the face of two major but different
problems.
The first problem is the productive system’s difficulties in providing
goods and services. There is not enough manpower, among other reasons
because the working population, those who are seeking employment,
plummeted in Europe between 2007 and 2014 and in the United States
too. Despondency is rife.