Public debt in Europe is growing. Despite austerity, EU gross government debt has risen every year since the financial crisis in 2007-2008. Currently, 16 out of the 28 EU Member States are breaching EU rules over public debt, with total debt burdens larger than the 60%-of-GDP limit set out in the Maastricht Treaty.
Critics argue that the growing debt mountain proves that austerity policies have failed, while supporters point out that deficits (i.e. the amount that government income falls short of expenditure) have been steadily shrinking, which is a more important indicator.
What do our readers think? We had a comment sent in from Tony, arguing that something should be done about the “massive government debts” because they posed a risk to economic stability in Europe. So, what’s the solution?
How would YOU cut government debt? We asked Members of the European Parliament (MEPs) from all sides of the political spectrum to stake out their positions on this question, and it’s up to YOU to vote for the policies you favour. See what the different MEPs have to say, then vote at the bottom of this debate for the one you most agree with! Take part in the vote below and tell us who you support in the European Parliament!
Well, you know debt is not the problem, it only became the problem because of Germany. Over the centuries, countries have always had debts, and they reduced their debts by borrowing more money. Today, however, it has become a major problem because Germany has imposed its own rules of governing that have more to do with family economics than the science of economics. All major economists – including Nobel prize winners like Paul Krugman and Joseph Stiglitz – say debt is not the problem. The problem is that we have no growth.
Well, I think there has been a focus on cutting public expenditure in order to cut public debt over the last few years. We, as Greens, would rather look at how we can increase the income side of the equation. So, for example, when we look at a Financial Transactions Tax, or a common corporate tax base, or wealth taxation inside the EU, we are looking at ways to increase public budgets in order not to create more debt, and at the same time to have the expenditure needed to boost the economy in a sustainable way. Over the last few years this has been neglected and has created a major economic and social crisis.
The European People’s Party (EPP) would cut government debt by promoting budget responsibility and measures supporting economic growth.
Laura Ferrara (EFD), Member of the European Parliament:
We are facing a political battle to opt out from the euro. Indeed, in our opinion the European currency – a de facto foreign currency – is the main reason behind the high government debt in many Member States, such as Italy.
If the state is free to issue its own currency with which it must repay its debts, it can always guarantee the payment of government bonds it has sold. If it cannot issue its own currency, it must procure money abroad to repay both bonds and interest. To do so the state will have to tax citizens, cut public spending, and go further into debt. This is the paradox of debt that pays off more debt even as it multiplies itself; a vicious circle that has its origins in the absence of monetary sovereignty.
Curious to know more about the growing debt burden across Europe? We’ve put together some facts and figures in the infographic below (click for a bigger version).
IMAGE CREDITS: CC / Flickr – Cathrine Idsøe
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