Fiscal Austerity in Europe Is Self-Defeating, Niesr Says

The fiscal austerity programs that are being implemented across Europe are self-defeating and will lead to higher debt by next year, a research group said.

Government debt as a share of gross domestic product will increase by an average of 5 percentage points as a result of budget squeezes across the continent, the National Institute of Economic and Social Research said today. Britain and every euro- area country except Ireland will see debt ratios rise, it said.

“In current circumstances, fiscal consolidation is indeed likely to be self-defeating,” the London-based group said in a statement. “As a result of the fiscal consolidation plans currently in train, debt ratios will be higher in 2013 rather than lower.”

The research follows a warning from the International Monetary Fund earlier this month that budget consolidation programs may cause a bigger-than-anticipated drag on economic growth.

To contact the reporter on this story: Gonzalo Vina in London at

To contact the editor responsible for this story: James Hertling at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.