Article Summary – Article Example
The Impact of Germanys Austerity in Europe Your Full The Impact of Germanys Austerity in Europe This paper focuses on recession, economic austerity and the European Union [EU]. The article of Smale and Alderman (2014) discussed the current socio-political crisis faced by the members of the EU as a result to Germanys insistence on austerity.
Recession has affected almost all nations in the world, and Europe appears to be taking the longest beating. As a means to cope with budget deficit, Chancellor Angela Merkel insisted on economic austerity. With this, the German government declined to invest on infrastracture and failed to bring in investors that will somehow encourage the people to spend. Further, other German private companies have begun investing outside Europe, causing a reduction in the regions cash flow. At present, the EU is divided on the issue of austerity and this has put France and Germany at opposite stand-points even if they are the closest partners in the commission. The region is at economic risk, given the fact that Italy is still in recession, and Germany appears to have a very strong hold on the decisions and policies implemented in the European Union (Smale and Alderman, 2014).
The formation of the EU made trading easier in Europe, one reason of which is the use of a single currency throughout the region - euro, except for Germany and France. Aside from the currency, this also paved the way to open trading, resulting in the regions economic growth. Further, members affected by recession are easily given financial aid (American Heritage Dictionary, 2000).
This article is important because the impact of Germanys implementation of austerity has divided the members on the issue and has delayed the formulation of policies that are supposed to address the pending problem on recession. With Italy already in recession, it is important that the EU prevents the situation from getting worse and Germanys influence on the EU appears to be not helping at all. If the EU further delays on taking action, other members may also be under recession again. With unemployment and investors backing out, there will be a higher cost of products and services. At first, the effect will be felt only in the region, but as the situation lengthens and progresses, other countries which have economic ties with the EU will also be affected.
As Germany remains steadfast on its decision and the EU members being divided on the issue, should a policy be created or amended to prohibit the implementation of austerity when one of the EU members is under recession?
Smale, A. & L. Alderman. (2014 Oct 7). Germanys Insistence on Austerity Meets With Revolt
in the Eurozone. The New York Times. Retrieved from http://www.nytimes.com/2014/10/08/business/rift-opens-among-eurozone-leaders-over- germanys-insistence-on-austerity.html?ref=international.
The American Heritage Dictionary of the English Language. (2000). European Union. (4th ed.) Houghton Mifflin Company.