Italian economists slam austerity measures
A group of 100 Italian economists has written an open letter warning that the EU austerity policies being imposed on Southern Europe may tip the region into a downward spiral, risking the disintegration of the monetary union.
By Ambrose Evans-Pritchard
17 Jun 2010
“The `politics of sacrifice’ in Italy and in Europe run the risk of accentuating the crisis in the end, causing a faster rise in unemployment and company failures, and could at a certain point compel some countries to leave monetary union. We must have an immediate debate on the extremely grave errors in economic policies now being committed,” the economists said.
“The fundamental point is that the current instability of monetary union is not just the result of accounting fraud and over-spending. In reality, it stems from a profound interweaving of the global economic crisis and imbalances within the eurozone.”
The letter, which has echoes of a famous letter to The Times by 360 economists denouncing the Thatcher cuts in the early 1980s, was drafted by a network of Left-leaning Keynesian economists and published by Il Sole.
The letter accused the EU authorities and leading governments of being out of step with modern economic thinking, marking the first clear revolt by parts of the eurozone’s intellectual elite against EMU orthodoxies and especially against the “deflationary economic policies” being imposed by Germany.
The group said states might choose to leave EMU in order to end job destruction.
“Some countries will be pushed out of the eurozone, others will break away to free themselves from a deflationary spiral.”