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This is an excellent and MUST READ editorial article from the FT. Check it out!

Europe loosens the fiscal belt a notch – FT.com.

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The article has confirmed my own views that following this week’s announcements “loosening the fiscal belt a notch”, the fizz will soon fade.

Personally, I totally endorse the following comment in the article:

It is a source of regret that Germany – and the other countries that have fiscal space – have failed to cut taxes, particularly on income and consumption. The extra spending would have offered relief to crisis-hit countries via their exports.

So to conclude, this week we have seen leading politicians and the EU face up to the crisis in youth unemployment caused by excessive austerity; we have also seen loosening of budgetary targets to avoid further fractious exchanges between France and Germany. On the negative side, there are still no signs of increasing demand especially in Germany; and the ECB is still not doing enough on the monetary front.

Any thoughts?

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