The manifest failure of Eurozone austerity. Government deficits in Spain, Ireland, Greece, Portugal and the UK

Real-World Economics Review Blog

According to Elstat,the turnover index in retail trade at current prices, excluding automotive fuel, recorded a decrease of 14.4% in July 2013 compared with July 2012. The Index in July 2012 recorded a decrease of 8.5% compared with July 2011“. For Spain, the comparable data for August 2013 and 2012 are -4,5% and -4,9%. Comparable declines took place in 2011 and 2010. One expects that, once, things will bottom out but it is not happening yet, more than five years after the beginning of the crisis, at least not in these countries. This also shows in data on government deficits. Despite sizeable cuts in expenditure in especially Greece the deficits are not shrinking as decreasing expenditure (government, non-financial companies, households) leads to lower incomes and lower tax receipts, despite all kinds of tax increases.(see graph, four period average of government deficits, % of GDP, Eurostat data, 2005Q4-2013Q1)).

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