In this podcast, Federica Mogherini follows up a Parliamentary Assembly debate on financial retrenchment in Europe with a call for “smart austerity,” to deliver economic recovery.
The Italian (photo) made her maiden speech to the assembly during the 26 June debate on the consequences of austerity measures on democracy and social rights standards.
She wants Europeans to benefit from a “bridge” between jobs or to a pension and sees educational investment as key to the end of austerity, believing this could be financed from cutting waste in state expenditure and from cutbacks in defense spending.
“The state has to help, to facilitate that every single family has an income,” Mogherini says. “We have to take together the cuts in the budget. We have to spend less but we have to spend better.
“We have to make choices on the basis of priorities. Priority number one is eductaion.”
Five minutes with Federica Mogherini
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The Parliamentary Assembly debate was headlined by a speech from Iceland’s Economic Affairs Minister Steingrímur Sigfússon. He said that his country’s experience showed that there is “an end to the tunnel” of austerity but not through financial cuts alone.
After outlining events that led to a complete financial collapse in Iceland in 2008, with massive devaluation of the Krona and unemployment rising from virtually zero to 9% in two years, he said that the deficit and debt have come down, unemployment has fallen back to 6 percent and growth is back. IMF loans are being paid back earlier than expected.
In addition to having taken austerity measures – cutting expenditures – Iceland also increased taxes in a progressive three-bracket tax system, raised capital gains and alcohol and tobacco taxes – and even introduced a wealth tax.
Sigfússon advised that in working with international institutions, it is important to “own” the aid programme as much as possible. The IMF “saw that we were serious people” and decided to “adapt to our needs, because we wanted to preserve the Nordic welfare system.”
Video: Iceland’s Economic Affairs Minister Steingrímur Sigfússon speech to the assembly