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Angela Merkel’s mania for austerity is destroying Europe, says Mehdi Hasan

The German Chancellor is terminating growth and pushing us towards a new Depression.

Which world leader poses the biggest threat to global order and prosperity? The Iranian president, Mahmoud Ahmadinejad? Wrong. Israel’s prime minister, Binyamin Netanyahu? Nope. North Korea’s Kim Jong-un? Wrong again.

The answer is a mild-mannered opera fan and former chemist who has been in office for seven years. Yes, step forward, Chancellor Angela Merkel of Germany, whose solution to Europe’s financial crisis – or lack thereof – has brought the continent, and perhaps the world, to the edge of a second Great Depression. “World Bank warns that euro collapse could spark global crisis”, read the headline on the front of the Observer on 17 June.

With apologies to Mike Godwin and his eponymous law, Merkel is the most dangerous German leader since Hitler. Her eight predecessors – from Konrad Adenauer to Gerhard Schröder – presided over a manufacturing miracle at home and the rehabilitation of Germany’s reputation abroad. Under Merkel, however, the country finds itself isolated once again, loathed and feared in equal measure.

Cartoons in the newspapers of Germany’s neighbours have depicted the chancellor with a Hitler moustache or wearing a spiked, Bismarck-era military helmet. Commenting on the phenomenon, the columnist Jakob Augstein observed: “Her abrasive pro-austerity policies threaten everything that previous German governments had accomplished since World War II.” Merkel, Augstein rightly noted, is “a radical politician, not a conservative one”.

Neighbourhood bully

Merkel did not cause the financial crisis; that (dis)honour still belongs to the world’s “top” bankers. But her deficit fetishism and obsession with spending cuts are exacerbating the continent-wide debt-and-growth crises that threaten to upset more than six decades of pan-European unity and stability.

Then there is her bullying tendency. The majority of Greeks voted on 17 June either to delay or to cancel the EU-imposed austerity plan; up popped Merkel the next day to warn: “No departures can be made from the reform measures . . . We have to count on Greece sticking to its commitments” – and to slap down her foreign minister, who had suggested that the EU might give Greece more time to do cuts.

Merkel prefers to fiddle as Athens burns – and Madrid and Rome, too. Youth unemployment in Spain and Greece is hovering around 50 per cent; in Italy, a third of 15-to-24-year-olds are out of work. Riots beckon as Europe’s far right attracts new supporters. It is ironic that the leader of a nation paranoid about and offended by any mention of its Nazi period seems so relaxed about the rise of anti-austerity, neo-Nazi parties across the EU, from Marine Le Pen’s National Front in France to Greece’s black-shirted Golden Dawn to the fascists of Jobbik, now the third-largest party in Hungary’s parliament.

Merkel’s supporters argue that this is unfair. She is, they say, standing up for hard-working Germans who are weary of bailing out their feckless southern European neighbours. This is nonsense. First, figures released by the OECD show that the “lazy” Greek worker labours for 2,017 hours per year, which is more than the average in any other EU nation – and more than 40 per cent longer than the average German works. So a little less Schadenfreude, please.

Second, it isn’t just southern Europeans who are revolting against fiscal sadism. In May, Mer­kel’s Christian Democrats suffered a humiliating defeat in an election in Germany’s most populous state, North Rhine-Westphalia. It was the party’s worst result in the state since the Second World War. Ordinary Germans are starting to acknowledge that austerity isn’t working.

But Merkel won’t budge. She is a purveyor of the conventional wisdom which says that the economy is like a household that can’t borrow or spend more than it earns. But economies are not households – or credit cards! – and common sense tells us that the solution to a downturn caused by a prolonged drought in demand is not to reduce demand further (by slashing spending). History teaches us that the Great Depression wasn’t helped by Herbert Hoover’s cuts in the US and, in pre-war Germany, it was mass unemployment, not hyperinflation, that propelled Hitler to power in 1933.

Fiscal self-flagellation

In a study published in 2010, analysts at the International Monetary Fund found just two cases, out of 170 examples across 15 advanced economies between 1980 and 2009, in which cuts in government spending turned out to be expansionary for the economy overall. They concluded: “Fiscal consolidation typically has a contractionary effect on output.”

Merkel’s insistence on fiscal self-flagellation, her unwillingness to countenance any fiscal stimulus by Germany or an easy-money policy by the European Central Bank, have pushed depressed countries such as Greece further into depression. The recent announcement at the G20 summit in Mexico that Merkel may now be willing to allow eurozone institutions to buy up the debt of crisis-hit member countries is too little, too late.

This isn’t just about geopolitics or macro­economics. Europe’s austerians have blood on their hands. Suicide rates are up by 40 per cent in Greece; the birthplace of western democracy is being remorselessly reduced to the status of a developing country. Meanwhile, Merkel, as the US economist Robert Kuttner wrote earlier this month, “continues to pursue Germany’s narrow self-interest . . . [because] Germany benefits from the rest of Europe’s suf­fering in two ways – expanded exports and dirt-cheap money”.

In denial and bent on austerity über alles, Merkel is destroying the European project, pauperising Germany’s neighbours and risking a new global depression.

She must be stopped. 

Mehdi Hasan is the author of the ebook “The Debt Delusion” (Vintage Digital, £3.74). For the New Statesman's position on the Eurozone crisis, read our leader here.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 25 June 2012 issue of the New Statesman, Europe’s most dangerous leader

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Apprenticeships remain a university alternative in name only for too many young people

New research shows that those who do the best apprenticeships will earn higher salaries than graduates, but government targets undermine the quality of such schemes.

Rare is the week that passes by without George Osborne donning a hi-vis jacket and lauding the worth of apprenticeships. The Conservatives have made creating 3m apprenticeships a governing mission. Labour, both under Ed Miliband and Jeremy Corbyn, are scarcely less enthusiastic about their value.

The best apprenticeships live up to the hype. Those with a level five apprenticeship (there are eight levels) will earn £50,000 more in their lifetime than someone with a degree from a non-Russell Group university, as new research by the Sutton Trust reveals.

But too many apprenticeships are lousy. In 2014/15, just 3 per cent of apprenticeships were level four or above. Over the last two years, there have only been an estimated 30,000 apprenticeships of at least level four standard. So while David Cameron comes up with ever grander targets for the amount of apprenticeships he wants to create, he neglects what really matters: the quality of the apprenticeships. And that's why most people who can are still better off going to university: over a lifetime the average graduate premium is £200,000.

Proudly flaunting lofty targets for apprenticeships might be good politics, but it isn’t good policy. “The growth in apprenticeships has been a numbers game with successive governments, with an emphasis on increasing quantity, not quality,” says Sir Peter Lampl, Chairman of the Sutton Trust.

60 per cent of apprenticeships today are at level two – considered to be no better than GCSE standard. These might help people get a job in the short-term, but it will do nothing to help them progress in the long-term. Too often an apprenticeship is seen as an end in itself, when it should be made easier to progress from lower to higher apprenticeships. The Sutton Trust is right to advocate that every apprentice can progress to an A-Level standard apprenticeship without having to start a new course.

Apprenticeships are trumpeted as an alternative to going to university. Yet the rush to expand apprenticeships has come to resemble the push to send half the population to university, focused more on giving ever-greater numbers a qualification then in ensuring its worth. For too many young people, apprenticeships remain an alternative to university in name only.

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.