Editor's Travel Blog

Wednesday, September 29, 2010

Things fall apart in austerity times – will the centre hold?

Decisions, decisions – desperate times calls for desperate measures. As Governments across the globe exercise their new vocabulary “cuts, cuts and cuts”, it is “all systems go” for unions and “down tools for workers”.

When the UK coalition government blamed the recession on its predecessor and rolled out its cost-cutting measures, the Governor of the Bank of England, Mervyn King quickly assured them that the blame lies with the financial institutions. Nevertheless, this was not enough reason for the Government to lay down the axe. The epidemic has now spread across Europe and unions have planned a general strike on Wednesday following a bid to force the 27 European Union nations to deposit billions of euros with Brussels that would be forfeited in the event of failure to tighten national spending.

Ironically, it is not just workers who are resisting the new austerity slogan. UK Defence Secretary Liam Fox leaked a letter he wrote to the Prime Minister to the media on Wednesday. The letter, spelt out the “grave consequences” for the capability and morale of Britain’s armed forces of the government’s proposed defence cuts.

Oh dear – some may argue that Liam Fox’s letter could be attributed to “sour grapes” especially as Mr Fox, unsuccessfully challenged Mr Cameron for the Tory leadership. Critics of Mr Fox will therefore say that he is proving to be a difficult minister to control, clashing openly with the Treasury over the funding of the Trident nuclear deterrent and has written ahead of a meeting of Mr Cameron’s National Security Council which discussed the cuts on Tuesday and leaked it to the media.

However, the protests are real and John Monks, general secretary of the European Trade Union Confederation says that members of his organisation need to demonstrate to voice concern over the economic and social context, which will be compounded by austerity measures of Wednesday's mobilisation.

Nevertheless, something must be done to bring down government debts and strategies need to be put in place to clean up the post-recession books. The question is whether a backlash from workers and senior ministers will help? News emerging from the European Central Bank (ECB) are also not very good. The ECB’s annual report on the banking sector, published on Wednesday, concludes that while the sector’s return on equity turned positive in 2009, the recovery has been uneven and substantial risks remain.

So, while airlines face huge EU bills for damages and workers resist the pay cuts, businesses cannot secure lending and the property market remain stagnant, things are really falling apart in austerity times and the centre cannot hold.

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