The economic and financial crisis has been affecting the EU since 2008. The effects of growing budgetary deficits have included the increase in governments’ borrowing costs to unsustainable levels in Greece, Portugal, Ireland and Spain, forcing them to request financial assistance. In return, they committed themselves to reducing the deficits through spending cuts and increases in taxation, with a series of so-called austerity measures. The collapse of the financial sector has more recently led Cyprus to do the same.
Current analyses show that the austerity measures are likely to contribute to a failure to achieve the employment and reduction of poverty goals of the Europe 2020 growth strategy. Research suggests there are causal relationships between large spending cuts, economic contraction and rising unemployment and income inequalities. Other possible adverse effects of austerity include its disproportionate impact on youth and women unemployment and lower income groups. In the future, austerity measures may also affect the attainment of the education targets of Europe 2020 in all four countries.
The European Parliament states that austerity measures exacerbate the negative social consequences of the crisis and that a comprehensive impact assessment of their social repercussions should be carried out.