Austerity budgets – made in Brussels

Italian economics minister Giulio Tremonti emerged from a meeting of EU finance ministers, which included Tory Chancellor of the Exchequer George Osborne, last December to announce that "budget policies in European countries cannot be national policies any more".

Under the Lisbon Treaty, the EU has given itself the power to slap economic sanctions and fines on countries which refuse to slash public services in order to cut deficits and maintain “budgetary discipline”. Under the plans, countries which fail to meet the Thatcherite Stability and Growth Pact economic criteria face hefty fines.

Osborne agreed with EU ministers for the need for “credible sanctions” for member states which did not conform with EU budget rules. European Commission president Jose Manuel Barroso said that it represented “a sea change in the way economic governance is dealt with in the European Union".

These EU-backed austerity measures are being repeated in all member states, especially those locked into the disastrous single currency. France is attempting to cut pensions and raise the retirement age to force employees to work longer. In Spain public sector workers face a pay cut of five per cent while unemployment has more than doubled to about 20 per cent.

In return for an EU bail out, the Greek government has pledged to slash the budget by £26 billion over three years, privatise the rail network and freeze public sector salaries and pensions. Marco Buti of the European Commission for Economic and Financial Affairs has also launched EU plans to slash public sector wages: "when wages in the public sector damage competitiveness and price stability then the country will be requested to change this policy.“ And the wage development in the public sector does of course have a great influence on the private economy," he said.

European Trade Union Confederation general secretary John Monks has even written to European Commissioner Olli Rehn in protest over the EU is "intervening" in national collective bargaining rights in Ireland. In a letter to Mr Rehn, the ETUC slammed the use of "diktat pressure" on the Dublin government to cut minimum wages and pensions in countries struggling with the economic crisis.

As part of an EU bail-out, the Irish government has slashed spending and cut all public sector pay by at least five per cent, pushing the economy into further recession.

Monks warned of the impact these strict new EU rules on fiscal governance would have on how member states manage their economies. Addressing the Institute of International and European Affairs in Dublin he predicted difficulties in reconciling “parliamentary autonomy” with “European commitments”. Mr Monks said the ETUC believed the EU was acting like the “governor general or grand vizier of some quasi-colonial administration”.

It is unacceptable that unelected EU institutions, without a mandate, are now deciding the budgets of member states and how much public sector workers earn. Yet the EU’s hand to impose its suicidal , corporate-driven neo liberal economic programme has been massively strengthened by the ratification of the Lisbon treaty.

This treaty gives EU institutions all the powers necessary to unleash a free fire zone for finance capital, creating a direct threat to jobs, public services and standards of living. In short, the EU is the agent of neo liberal structural adjustment in Europe and the Lisbon Treaty is the mechanism for carrying it out.

Brian Denny