According to a recent analysis, European citizens may have lost out on over €3,000 annually as a result of the austerity measures put in place by EU governments after the 2007 financial crisis.

According to a report issued on Friday by the New Economics Foundation (NEF) and Finance Watch, the EU countries might have spent up to €1,000 more year per person on public services if less drastic budget cuts had been made.

The announcement comes as EU nations are amassing debt at rates unmatched in contemporary peacetime in an effort to combat the COVID-19 pandemic and the impacts of the war in Ukraine.

Austerity measures, according to Frank Van Lerven, program lead for macroeconomics at NEF, have failed.

According to Van Lerven, the last ten years of austerity measures have hurt European economies and prevented an increase in our standard of life.

“A fixation on debt and deficit reduction does not promote economic growth or maintain low debt levels. Instead, austerity has prevented European nations from reaching their full potential.

In an effort to lower the nation’s debt, Brussels enacted harsher fiscal regulations for government borrowing and expenditure during the financial crisis. This was accomplished by reducing public investment and spending.

But as the pandemic spread, the EU suspended the Stability and Growth Pact (SGP) guidelines to give nations more leeway in managing the economic consequences.

According to research from the New Economic Foundation, Europe is now more vulnerable to economic shocks from COVID-19 and the crisis brought on by the war in Ukraine.

According to the analysis, €533 billion would have been available for EU countries to spend on infrastructure projects, particularly green ones, which may have helped lessen the impact of increases in energy prices, if the cuts had not been so severe.

However, Antonios Nestoras, interim executive director of the European Liberal Forum, told Euronews that the report’s findings lack a balanced viewpoint and neglect to take into account other significant factors. He also added that public spending levels can only be effectively managed once a foundation of societal wealth has been created.

Source: Euronews
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The prime minister, finance minister and central bank governor declared that the economy goes back to normality and there is no needed for cash movement restriction.
After Iceland’s biggest banks collapsed during the financial crisis, the government took some economic measures.

The restrictions were put in place to prevent panicked foreign investors from taking their money out of Iceland; nevertheless, thanks to tourism and investment, the economy recovered.

Source: Euronews

Date: 20 March 2017

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The structural reforms, hastened by Turkey’s EU accession process, have paved the way for comprehensive changes in a number of areas. The main objectives of these efforts were to increase the role of the private sector in the Turkish economy, to enhance the efficiency and resiliency of the financial sector, and to place the social security system on a more solid foundation. As these reforms have strengthened the macroeconomic fundamentals of the country, the economy grew with an average annual real GDP growth rate of 4.7 percent over the period of 2002 to 2014.

Average Annual Real GDP Growth (%) 2002-2013

Source: OECD, Eurostat and national sources

Moreover, Turkey’s impressive economic performance over the past decade has encouraged experts and international institutions to make confident projections about Turkey’s economic future. For example, according to the OECD, Turkey is expected to be one of the fastest growing economies of the OECD members during 2014-2016, with an annual average growth rate of 3.6 percent.

Annual Average Real GDP Growth (%) Forecast in OECD Countries 2014-2016 

Source: OECD, February 2015

Together with stable economic growth, Turkey has also reined in its public finances; the EU-defined general government nominal debt stock fell to 33.5 percent from 67.7 percent between 2003 and 2014. Hence, Turkey has been meeting the “60 percent EU Maastricht criteria” for public debt stock since 2004. Similarly, during 2003-2014, the budget deficit decreased from more than 10 percent to less than 3 percent, which is one of the EU Maastricht criteria for the budget balance.

As the GDP levels increased to USD 800 billion in 2014, up from USD 305 billion in 2003, GDP per capita soared to USD 10,404, up from USD 4,565 in the given period.

The visible improvements in the Turkish economy have also boosted foreign trade, while exports reached USD 158 billion by the end of 2014, up from USD 47 billion in 2003. Similarly, tourism revenues, which were around USD 14 billion in 2003, exceeded USD 34.3 billion in 2014.

Significant improvements in such a short period of time have registered Turkey on the world economic scale as an exceptional emerging economy, the 16th largest economy in the world and the 6th largest economy when compared with the EU countries, according to GDP figures (at PPP) in 2013.

a. Institutionalized economy fueled by USD 144 billion of FDI in the past decade
b. 16th largest economy in the world and 6th largest economy compared with EU countries in 2013 (GDP at PPP, IMF-WEO)
c. Robust economic growth with an average annual real GDP growth of 4.7 percent during 2002-2014
d. GDP reached USD 800 billion in 2014, up from USD 305 billion in 2003
e. Sound economic policies with a prudent fiscal discipline
f. Strong financial structure resilient to the global financial crisis

 Date: 13 March 2017

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.