Bridging the Prosperity Gap in the EU
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Bridging the Prosperity Gap in the EU

The Social Challenge Ahead

Edited by Ulf Bernitz, Moa Mårtensson, Lars Oxelheim and Thomas Persson

Taking an interdisciplinary approach, the authors invaluably pinpoint both overarching problems and possibilities associated with the social dimension of European integration. Prominent researchers of economics, law and political science tackle this complex issue, providing new solutions within their respective fields of expertise. Illustrating the importance of cohesion, this book is vital for those interested in comparative European studies, from backgrounds in public and social policy, law and economics.
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Chapter 5: The political challenge of austerity politics

Pär Nyman

Abstract

This chapter analyses how the tension between fiscal discipline and responsiveness to popular demands contributes to widening the prosperity gap in Europe. On the one hand, the author argues, the countries most affected by the Great Recession still have a pressing need to strengthen their budget balances and to reduce their debt levels. If they fail to improve fiscal discipline, they will remain vulnerable to economic crises in the future. On the other hand, austerity is often met by public resistance. The political consequences of going against the voters’ preferences can be dramatic and pave the way for populist parties. Thus, governments should not only increase their budgetary safety margins during upturns in the business cycle, but also take measures to increase public support for fiscal discipline. This will reduce the tension they experience between fiscal responsibility and electoral responsiveness.

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