But mistakes are always made in crises, and successful politicians keep diverse constituencies on board, as she has managed to do. The fundamental question is whether you end up afloat, and Europe has. Thanks to substantial reforms because of the crisis in most EU countries, Europe will probably come out with a higher growth rate. During the height of the euro crisis, Jean-Claude Juncker, then prime minister of Luxembourg, made a statement that encapsulates everything that is wrong with the political thinking about the crisis: We heads of government all know what to do, we just dont know how to get re-elected when we do it. These words have stuck in the public mind as an evident truth, but they are patently untrue. Junckers words reflect the contempt of elites for their voters, suggesting that citizens are short-term vote cattle while the political leaders are wise. The financial crisis in Europe has shown that the opposite is true. Governments that pursued short-term and irresponsible fiscal policies in the vain hope of temporary growth improvements have been thrown out by the voters, while quite a few fiscally responsible governments have been re-elected. Five years have passed since the global financial crisis erupted. By my count, 19 of the 28 EU governments have been thrown out by their voters in this period ( Austria s parliamentary elections occurred before and after the period in question), while eight have been re-elected, namely the governments of Estonia , Finland , Germany, Latvia, the Netherlands, Poland , Sweden and, indeed, Luxembourg. These eight countries have center-right governments and have pursued responsible fiscal policies. Before the crisis they had budget surpluses.
It stood at 12 percent in July. Unemployment in Europe is a social tragedy and we need to address it, OECD Secretary-General Angel Gurria said in July when presenting the organizations annual employment outlook . German Strength Earlier this month, Air France-KLM (AF) Group, Europes biggest airline, scrapped a plan to break even at its main French unit this year, putting 2,800 jobs in the country at risk. France s unemployment still looks to be gradually creeping up, economists at HSBC Holdings Plc in London said in a note to customers. On the euro area, they said that the unemployment rate has been unchanged for five months and that this may have continued in August as the labor market appears to have stabilized. While most Southern European economies are struggling to provide work for the unemployed, the jobless rate in Germany , the regions largest economy, remained at 6.8 percent in September, according to 31 estimates in a separate Bloomberg survey . Thats close to a two-decade low of 6.7 percent. The Federal Labor Agency is due to publish these data tomorrow at 9:55 a.m. in Nuremberg. A robust job market and Germanys economic strength in the midst of the euro areas debt crisis helped Chancellor Angela Merkel s Christian Democrats take the largest share of the vote in Sept. 22 elections. Resurgent Economy Gross domestic product in the 17-nation euro economy grew 0.3 percent in the three months through June, the first quarterly expansion after six contractions. Signs of resurgence in the economy have helped boost equities, with the Stoxx Europe 600 Index up 5 percent since the start of the month. Economic confidence rose more than forecasts in September, with sentiment improving in the industrial sector as well as in services, retail and financial services. While the ECB expects the currency blocs economy to gain further strength in the second half of this year, Draghi said this month that risks are still on the downside, referring to a modest pace of the recovery. The Frankfurt-based central bank predicts the economy will shrink 0.4 percent this year before growing 1 percent in 2014. The ECB pledged to keep interest rates at current levels or lower for an extended period of time to fuel the recovery, a commitment it first made in July and repeated in August and September.
German elections and Europe’s economy: Five things you need to know
Merkel’s stewardship of the German economy has been good for the country, but not for all of its citizens. Since she was first elected in 2005, Merkel has steered a steady course, shielding German output from the worst of the financial crisis. This is reflected in upbeat readings for business confidence and a 75% appreciation for the Xetra Dax, the nation’s main bluechip stock index. While unemployment soared in the eurozone and in the U.S. after 2008, Germany’s jobless tally decreased. READ MORE: How Merkel become more American Has crisis split Europe in two? Economists have also argued Germany’s exports benefit greatly from being priced in a currency that is much weaker than the Deutsche Mark would otherwise have been. Barroso: Europe not out of crisis However, large numbers of people are reliant on low-paid “mini-jobs” which leave them struggling to make ends meet. The Social Democrats are calling for a national minimum wage to combat the problem of the “working poor.” Human toll of economic crisis The OECD warned recently that the gap between rich and poor in Germany was wider than in any of the group’s member states, which include the U.S. and Mexico. How did Merkel survive while the rest fell? As only the third person in post-war times to win three terms in office — joining Helmut Kohl and Konrad Adenauer — Merkel has cemented her place in the history books. She is now positioned to topple Margaret Thatcher from the top spot as most powerful female politician of all time. Her style has been bred from her upbringing under communist rule in East Germany. The ever-present secret police — the Stasi — taught her the importance of discretion and knowing when to speak up or not.