Beyond Austerity : A European Recovery is Feasible

The European Council of 8 February 2013, with its decision to cut the EU budget to 1% of GDP, made a great mistake: it aggravated the recession of the European economy and, tacitly, admitted that a European recovery policy is impossible. In this paper the Authors show that with an annual EU budget of only 1.19% of GDP, a recovery plan of 2% of GDP is possible, in order to fill the gap in European aggregate demand for investment and consumption. The twofold aim of this exercise is to show that European parties and leaders can put forward an alternative economic policy to austerity and that European fiscal imbalance is one of the major causes of the crisis of democracy in Europe