THE OBSERVER: Eurozone finance ministers were still committed to spending their way to recovery only a few months ago. Then came the Greek debt crisis, which threatened to engulf the continent. Despite warnings from the US, Britain and its EU neighbours are braced for unprecedented public sector cuts
When Angela Merkel talks about budget cuts these days she likes to invoke the "Swabian housewife" – Germany's equivalent of the parsimonious Scot. In that part of south-west Germany they have a reputation for scrimping and saving. Famously, Swabia's cooks make hearty soups out of all the leftovers in the kitchen. To the German chancellor they are the embodiments of good housekeeping.
"You can't keep living beyond your means," says Merkel. "One should simply ask the Swabian housewife."
By extolling the virtues of old-fashioned thrift, Merkel hoped last week to go some way towards explaining to ordinary Germans why they must suddenly swallow the most painful austerity pill administered by their government in generations. Last Monday, with some trepidation, she announced massive cuts of €11.2bn in 2011 and plans for a total of €80bn by 2014. Yesterday, in Stuttgart and elsewhere, the inevitable protests began on the streets.
Even for a country painfully aware, because of its history, of the danger of debt, the extent of corrective action came as a shock. "Germany has never agreed to an austerity package to this extent, but these cuts have to be made in order for the country to establish a stable economic future," Merkel said.
Across Europe other governments, scared by the Greek debt crisis, the repercussions of which imperil the very existence of the euro, have been doing the same, raising the spectre of mass layoffs in public services in the name of European unity. >>> Toby Helm, Ian Traynor and Paul Harris | Sunday, June 13, 2010
