AltAusterity Digest #98 May 9-15, 2019

Despite the economic integration of Europe, political divisions along national lines may present significant barriers to developing a continental Green New Deal. While a host of radical left parties have put climate change near the top of their agendas, many of these parties remain in minority positions. Furthermore, support for a Green New Deal from labour unions is virtually nonexistent at an institutional level. EU-imposed budget deficit limits also place limits on national level green initiatives and rules that protect free competition restrict the kinds of direct investment that would be needed to make that transition to green economies. Despite these organizational and structural limitations, the combination of popular dissatisfaction with austerity, a young generation concerned with climate change, and the proliferation of radical left parties may have an influence on Europe’s climate policy.

Italian Deputy Prime Minister Matteo Salvini said Wednesday that EU budget regulations are “starving the continent,” and that they “must be changed.” This comment came a day after markets responded negatively to Salvini saying that in order to lower unemployment, Rome should be willing to break the EU’s deficit ceiling of 3% of GDP and raise debt to 140% of GDP. Italian government debt is currently the second highest in the EU after Greece. Salvini, who is the leader of the euro-skeptic League party has had his comments condemned by the Italian coalition-partner 5-Start movement.

Greg Albo, Bryan Evans and Carlo Fanelli discuss the 2019 Ontario Conservative budget in its historical and contemporary context. The budget represents a continuation in form and content of the previous Conservative and Liberal austerity programs. The authors point out that program spending over the last decade has been growing at half the rate it has been in the rest of Canada, aggressively amplifying the logic of austerity. While the 2019 budget does forecast expenditure growth, when inflation and population growth are considered, the increases amount to cuts in per-capita program spending. The author’s detailed account of the budget leads them to conclude that the Ford government is entrenching its position as a right-wing populist regime intent on extending the era of “permanent austerity.”

The government of Pakistan has agreed to terms for a $6bn bailout package from the International Monetary Fund (IMF). The funds will be exchanged in return for structural reforms, including reducing government spending. The aim will be to reduce the fiscal deficit from its current level of 1.9% of GDP to 0.6% of GDP. Other changes will include revenue generating reforms to reduce tax exemptions and improve tax administration. Pakistan’s economy has been struggling of late due do rising inflation, a devalued rupee, tightening monetary policy and slowing domestic demand. This will be the 12th IMF bailout package accepted by Pakistan since 1988.

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