REDUCING SPENDING AND BUDGET DEFICITS WILL NOT SOLVE EU ECONOMIC DIFFICULTIES

The current focus by the EU is to reduce spending as much as possible to reduce budget deficits. This will cause lower growth and falling tax revenues. By doing that we will get a prolonged economic stagnation and a serious recession in the south of Europe (Greece, Italy, Spain, Portugal, France etc..) Reducing budget deficits will not by itself solve the EU economic difficulties.

According to the IMF overall European economic activity will be just be 1.8% in 2012. In the countries under the most pressure from the markets austerity measures will get harder and unemployment worsen. Spain will see a 1.1% growth, Germany a mere 1.3%, Italy will grow by only 0.3%. The Portuguese economy will contract by 1.8%. The Greek economy will contract by 2%.