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AltAusterity Digest #37 March 1-7, 2018.

This week in Austerity News:

Mar 10, 2018

Elections in Italy saw more than half of the electorate vote for Euroskeptic, anti-establishment parties on both the left and right. The party taking the largest share of the vote was the leftist Five Star Movement with 32.7%, making it the largest party in parliament. These gains on the left were partially matched by gains on the right as the anti-immigrant and nationalist party The League took 17.4% of the vote, and the Brothers of Italy took 4.4%. The rise of these Euroskeptic parties is in part a response to the countries slow economic recovery since the Great Recession, and the imposition of E.U. austerity policies. On Monday, the League announced its intention to form a coalition with Forza Italia, meaning the right and center-right parties will be the ones to govern.

The U.K. Conservatives have achieved a current accounts surplus. A number of former Conservatives, including David Cameron, George Osborne and Andrew Cooper, have been celebrating this “success” on social media. According to IMF analysis, the UK and Ireland’s “spending first” methods of austerity – closing fiscal gaps through spending cuts – has allowed them to experience faster growth than the rest of western Europe (at least until the Brexit vote). However, as New Statesman special correspondent Stephen Bush points out, the relationship between the fiscal balance sheet and growth ignores key parts of the story. Bush point to the human costs of austerity, the degree of exposure during the crisis, the continued struggles of the Eurozone countries, and the resurgence of the Left under Corbyn to highlight how austerity has not been a successful policy regime.

An IMF blog makes the case that the time may be approaching for governments to start tackling budget deficits. Citing the fact that global economic growth is picking back up for the first time in almost a decade, IMF Assistant Director of Communications Christoph Rosenberg claims that “the time to fix the fiscal roof is now, while the sun is shining.” Rosenberg claims that higher global interest rates could put strain on economies that would have to divert resources from infrastructure and social spending towards servicing the debt. To tackle this risk, and to reduce deficits more generally, Rosenberg suggests simplifying the tax code, broadening the tax base, and improving collection capacities, as well as cutting “unproductive” spending and subsidies.

After a nine-day strike by West Virginia teachers, the state has agreed to the targeted 5% pay increase. On Saturday, the teachers and other service personnel were offered a 4% raise but declined the offer demanding their target of 5%. The strike began February 22 when 20,000 teachers walked off the job demanding higher wages and better benefits, particularly concerning employee health insurance. The strike has had a ripple effect outside of West Virginia, as Oklahoma teachers have said they too are considering walking off the job next month. The West Virginia government has said it will scale back spending by $20 million in cuts to general services and Medicaid to maintain fiscal responsibility.

That's it for this week's Digest! Check back next Friday morning for another edition, or subscribe to our newsletter for a weekly roundup. We'll also Tweet each time we add new content, so you can keep up with our work @AltAusterity and join the #altausterity conversation!