Euroland’s authorities are inflicting a triple shock of fiscal, monetary, and currency tightening on a broken economy. They are doing so in a region where industrial output is still 14pc below its peak, where growth barely scraped above zero over the winter “recovery”, and where youth unemployment is at 40pc in Spain, 35pc in Slovakia, 29pc in Italy, and 26pc in Ireland.
They seem unaware that China is slowing and the US is tipping into a second leg of the Long Slump. Last week’s collapse in America’s ECRI leading indicator to -9.8 marks the end of the V-shaped rebound. If this means what it normally means – recession within three months – Europe must take immediate action to prevent being drawn into a deflationary vortex. Spiraling public debt precludes further Keynesian spending, so this must come from central bank stimulus. Tight fiscal policy offset by ultra-loose money is the only option for Europe, the US, and Japan.