Will we find a response to the economic crisis in 2013?
Much attention has been focused during the holidays on the last-minute deal cobbled together between the US Congress and White House to avert a so-called ‘fiscal cliff’. The leaders of that great nation, seen from afar, didn’t cut very fine figures, as they bickered their way towards a compromise that seems unlikely either to close the deficit, or boost the economy.
Here in Europe, the language, timelines and names may differ, but the underlying malaise is the same. Since the banking collapse of 2008, a mountain of debt, economic stagnation and political paralysis have characterised the response of Western leaders. Nothing has happened since then to inspire confidence that they can lead us out of this mess.
The Eurozone crisis, despite an unusually quiet few months, leaves the EU perched on a fiscal cliff all of its own. Although the euro remains intact, Spain, Italy and several smaller member states face deep and unending austerity, recession and unemployment.
New terms and conditions have yet to be established that will enable the Eurozone to escape from this morass. Even if its members can agree such terms (which is more likely after the German elections in the autumn) it is difficult to envisage a scenario that will pull the weaker nations out of the swamp, rather than dragging the richer ones into it.
More fundamentally, why can’t democratically-elected politicians on either side of the Atlantic take decisive action to defuse the crisis? Perhaps there is no solution—but the compromises and half-measures implemented so far seem only to prolong our economic stagnation.
This piecemeal approach is exemplified by the 2014-20 EU budget, which is in limbo following inconclusive negotiations last November. As Peter Tindemans, secretary general of Euroscience and a seasoned observer of EU research policy, argues on page 7 of this issue, the progress of these negotiations so far suggests that our national leaders have already betrayed their own rhetoric regarding innovation and competitiveness.
Only last March, Europe’s leaders reiterated their supposed commitment to research and innovation at the heart of the Europe 2020 strategy. But when push came to shove, they quickly fell back to the maintenance of existing programmes in agriculture and cohesion, forsaking alternatives that might foster competitiveness or growth.
Europe’s crisis is confounded by a distinct lack of consumer confidence, as well as the structural issues with the euro. Germany is in a fools’ paradise, apparently believing that the competitiveness advantages that its exporting industries have enjoyed under the euro will continue indefinitely. France is trying to find a new direction, diverging from its historical partnership with Germany at the core of Europe. The UK, its own economy buckling under austerity, snipes from the sidelines.
We are already halfway through a ‘lost decade’ such as Japan experienced after 1990. Perhaps we need to start to imagine how Western nations might handle prolonged economic stagnation with the same forbearance as the Japanese have done.
It is in this spirit of foreboding, sadly, that we wish all of our readers a happy and prosperous 2013.