News Summary: Europe austerity yields weak results
News Summary: European countries pursuing toughest austerity see limited benefit
PAIN WITHOUT GAIN: Eurostat, the European Union's statistics office, found that budget deficits increased for several European countries last year despite their strict austerity policies.
AUSTERITY MOVES: After the European debt crisis erupted in late 2009, the region's governments slashed spending to meet conditions for bailout loans and reassure bond investors. Spending cuts and tax increases have proved to be less effective at reducing deficits than initially thought — and perhaps counter-productive.
MIXED RESULTS: Greece reduced annual borrowing to just over half of what it was in 2009, but its deficit swelled because of a deepening recession. Ireland reduced its annual borrowing and its deficit is shrinking faster than targeted. Deficits in Portugal and Spain deepened. Meanwhile, growth stalled in France, but Germany has turned a deficit into a surplus.
