‘Germany won’t leave eurozone but other states could’
RT:So the brakes seem to be on the German economy. What impact will that have on the eurozone?
Fabio de Masi: It will certainly have a very large impact because Germany is one of the largest economies in the eurozone and we have also stagnation in France, Italy slips into its third recession. So it’s a big problem for the eurozone.
RT:What is the root causes of Germany's growth slumping?
FM: I never believed the story of the German economic powerhouse or German economic miracle. Last year we had a growth rate of only 0.4 percent. The former government would have been embarrassed by a figure like that, and they said this is the German economic miracle. We certainly see the effects of austerity in other European countries; we are not living on an island. So if you cut wages, pensions, public investment, the German economy will also be affected. You can’t have a party in the garden when the house of your neighbor is burning. Secondly, we have cooling down in the US, monetary policies becoming tighter, we have cooling down of the Chinese economy. Thirdly, we have sanctions against Russia which also negatively affect the German economy. And the only one who is benefiting from these sanctions is the US.
RT:France has recently lashed out at Germany and its austerity regime. Does France have a point, or is it just jealous that Germany is still standing on its two feet?
FM: There is no reason to be jealous about Germany because we have huge sector of precarious work, roughly 20-25 percent of our workforce is not earning enough to maintain themselves. Secondly, they have clearly a point because when you have private households over indebted and they have to deleverage, so they have to cut back on consumption, business will not invest and the state is doing the same. There are only these three sectors of the economy, and then there is no way out of economic depression.
RT:Why is austerity not working in mainland Europe, but for the UK it seems to be having the desired affect?
FM: The UK is a completely different point because the UK has strong economic ties with the US. The US didn’t impose such harsh austerity measures; they had more expensive fiscal policy. Plus, the UK has some leverage because they have pretty much a flexible exchange rate – that is what the eurozone does not have. Opposed to that, the eurozone tried to make what the economists are calling “internal devaluation,” so cutting back on wages, pensions, public investment, hitting the majority of the population, and this can clearly not work. If private households have to cut back on consumption and the state does the same, then private business will never invest and that’s why we need to crowd in private investment to kick-start economy, by more public investment.
RT:Do you expect Germany to leave the eurozone?
FM: No, I don’t think Germany will leave the eurozone because the government has no interest in doing so as the other eurozone members are the main export destinations. However, I believe firmly that no democracy can survive that, for example, in Greece every second young person is without employment. If they continue down that road, we already saw the results during the European elections when right-wing parties came first in the elections in the UK, in France with Front National, if they continue this way then it will have big political repercussions, and other countries might feel forced to leave.
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