Kephalos
J.M.P.P. R.I.P. B5: RLOAI
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Economists fear high inflation and rising interest rates will make it harder for the continent to spend its way out of this downturn. Tom Fairless, Wall Street Journal.
One area where government spending has been felt most directly is the labor market. Public-sector employment across the eurozone has risen 4% since 2019, compared with a 1% increase in market-services jobs and a 1% decline in manufacturing jobs, according to European Central Bank data. One in four eurozone workers was employed by the state last year...
After the financial crisis of the late 2000s and the ensuing eurozone debt crisis, Europe also tightened its belt, he said, but not this time around, even though rising interest rates and market turmoil are making it harder for governments to deepen public debt.
For now, Europe’s state-driven splurge is helping to delay and alleviate the economic downturn and might even help control inflation in the short term. But economists worry that this approach also carries risks.