The Pros And Cons Of Austerity

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The question of whether austerity is a dangerous idea has been a hotly contested argument for decades now. With some seeing it as potentially detrimental to country’s economic structure, while others regard it as a necessary policy needed to bring the government out of financial disaster in drastic times where no other options are available other than the measures mentioned during austerity such as cutting expenditure, raising taxes, and bailing out banks. Austerity process is the actions normally pursued if there is a risk that a government can’t hold up its debt obligations. This might arise when a government has borrowed in currencies from foreign nations (Economist 2015). Austerity policies can also be attractive to the more affluent group…show more content…
In 2010, a vast recession resulted in the country being incapable of paying back its government debt without third-party backing. Therefore, in order to avert an insolvency crisis, Portugal requested applications for bail-out plans and took out €79 billion as a result. During late 2010, the Portuguese Government declared a new austerity deal following suit after other Eurozone countries, via a sequence of tax increases and salary reductions for public servants. As well, in 2010, the country attained its highest unemployment rate for over two decades of almost 11% and up to 15% during 2012, whereas the number of public servants continued to remain at a very high quantity (Peláez 2013). Following the announcement of the bailout, the Portuguese government Led by Pablo Coelho, succeeded in instigating actions to mend the State's financial situation and the nation began to see forthcoming improvements. After a period of increased poverty, low wages, pension cuts, and homelessness, Portugal began to strive once again, due to a surplus in 2016, Portugal wasn’t constrained by the excessive deficit procedure that had been employed in the economic crisis beforehand. The banking system was becoming increasingly stable, though there were withstanding non-performing loans and commercial debt. During 2016 Portuguese GDP reached $204 billion, up by about 2.7% from 2015, while unemployment rates went from 17.3% in 2012 to 10.1% in 2016 (Countryeconomy 2017). Austerity policies in Europe were being justified by the notion that there was “no other option”, yet Owen Jones argued in the Guardian, that “Portugal offers a powerful rebuke. Europe’s left should use the Portuguese experience to reshape the European Union and bring austerity across the eurozone to a halt” (Jones

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