EU TYPE OF AUSTERITY: BRIEF ANALYSIS AND CRITICISM

Although it has become a common place to blame austerity policies for lengthening the economic downturn of EU economies, the figures reveal that public spending increased in most of the EU countries between 2007 and 2013. Although budget deficits from EU countries were indeed reduced in the last 4 years, the cutbacks were more the result of increasing government revenues and hiking taxes than of decreasing public expenditures. The article will feature: (1) a brief analysis of the evolution of public spending compared to government revenues in EU countries and also, (2) a concise literature review on austerity, highlighting some of the most important theoretical controversies on this topic. The main thesis defended in the article is that – although EU type of austerity, narrowly focusing on fiscal consolidation, drove indeed to unfavorable economic consequences – the criticism formulated by pro stimulus economists is rather flimsy, given the fact that public expenditures actually increased in most of the EU countries.