Austerity casts shadow on pandemic

Health systems damaged by low spending

 
Senior Italian and Spanish policy-makers recently asked at an OMFIF roundtable what the point of Europe was. Several resentments feed into this sentiment, but an important one is the damage Maastricht-induced austerity has caused their countries’ struggling health systems.

As European leaders meet to discuss recovery funding, the effects of the 2008 financial crisis and subsequent recession are still fresh in the minds of decision-makers. Concerns about the long-term implications of an increase in corporate and sovereign debt as a result of the pandemic are not far from the conversation. But this crisis came from an external shock, not a financial crash.

As a French policy-maker said to OMFIF, ‘No country should suffer more than another in the euro area, it was not their fault and it would not be fair’. The underlying frustration felt by southern states with the lack of perceived solidarity from the northern states could fuel a rise in populism over the next few years. Especially if the crisis is put through the lens of the last 10 years of imposed austerity measures.

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