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EC president: Europe near austerity limit

Eurostat data shows the Irish, Spanish and Portuguese debt levels hit euro-era highs in 2012.

Europe may have reached the maximum political limits of austerity-led economic policies, according to José Manuel Barroso, president of the European Commission.

In his speech, Barroso said that while he still believed in the need for sweeping economic reforms and drastic cuts in budget deficits, such policies needed to have “acceptance, politically and socially”, which was now at risk, reported the Financial Times.

Barroso said: “While this policy is fundamentally right, I think it has reached its limits in many aspects. A policy to be successful not only has to be properly designed. It has to have the minimum of political and social support.”

Barroso’s comments came in respose to voters revolt in Italy and a deepening recession in much of the bloc. His remarks came the at the same time when Eurostat released data that revealed rise of debt in many eurozone countries despite unprecedented budget cuts and tax increases.

Of the eurozone members that received aid from the EU in 2012, only Greece saw its debt levels decrease, from 170 per cent of economic output in 2011 to 157 per cent.

The Irish, Spanish, Portuguese and Italian debt levels hit euro-era highs last year. Lisbon’s debt rose to 124 per cent of GDP from 108 per cent, while Rome’s debt rose from 121 per cent to 127 per cent. Overall, eurozone sovereign debt rose to 90.6 per cent of GDP in 2012.

The Eurostat report also highlighted the periphery’s divergence from the eurozone’s core, particularly Germany, which was the only EU country to post a budget surplus in 2012.

German tax revenue grew 3.4 per cent in the first quarter of 2013. In March alone, the increase was 5.7 per cent year on year, according to official figures, despite economic growth of 1.5 per cent.

Jens Boysen-Hogrefe, an economist and expert for public finances at the Kiel Institute, told FT: “Falling unemployment and higher wages are the biggest contributors to this development.”

Boysen-Hogrefe said the new data made it unlikely that Germany would post a budget deficit of 0.5 per cent of GDP in 2013, as finance minister Wolfgang Schäuble has estimated.

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No, David Cameron’s speech was not “left wing”

Come on, guys.

There is a strange journalistic phenomenon that occurs when a party leader makes a speech. It is a blend of groupthink, relief, utter certainty, and online backslapping. It happened particularly quickly after David Cameron’s speech to Tory party conference today. A few pundits decided that – because he mentioned, like, diversity and social mobility – this was a centre-left speech. A leftwing speech, even. Or at least a clear grab for the liberal centre ground. And so that’s what everyone now believes. The analysis is decided. The commentary is written. Thank God for that.

Really? It’s quite easy, even as one of those nasty, wicked Tories, to mention that you actually don’t much like racism, and point out that you’d quite like poor children to get jobs, without moving onto Labour's "territory". Which normal person is in favour of discriminating against someone on the basis of race, or blocking opportunity on the basis of class? Of course he’s against that. He’s a politician operating in a liberal democracy. And this isn’t Ukip conference.

Looking at the whole package, it was actually quite a rightwing speech. It was a paean to defence – championing drones, protecting Britain from the evils of the world, and getting all excited about “launching the biggest aircraft carriers in our history”.

It was a festival of flagwaving guff about the British “character”, a celebration of shoehorning our history chronologically onto the curriculum, looking towards a “Greater Britain”, asking for more “national pride”. There was even a Bake Off pun.

He also deployed the illiberal device of inculcating a divide-and-rule fear of the “shadow of extremism – hanging over every single one of us”, informing us that children in UK madrassas are having their “heads filled with poison and their hearts filled with hate”, and saying Britain shouldn’t be “overwhelmed” with refugees, before quickly changing the subject to ousting Assad. How unashamedly centrist, of you, Mr Prime Minister.

Benefit cuts and a reduction of tax credits will mean the Prime Minister’s enthusiasm for “equality of opportunity, as opposed to equality of outcome” will be just that – with the outcome pretty bleak for those who end up losing any opportunity that comes with state support. And his excitement about diversity in his cabinet rings a little hollow the day following a tubthumping anti-immigration speech from his Home Secretary.

If this year's Tory conference wins the party votes, it’ll be because of its conservative commitment – not lefty love bombing.

Anoosh Chakelian is deputy web editor at the New Statesman.