Analysis: Not Much Left For Europe’s Left

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Compounding the left’s problems, some conservative leaders such as Merkel and Swedish Prime Minister Fredrik Reinfeldt have successfully occupied the middle ground. “(Merkel) has taken any political polarization away by reverse-engineering the social democratic Third Way strategy,” said Henning Meyer, editor of the Social Europe Journal. “Similar to what Tony Blair and Gerhard Schroeder did in the 1990s and 2000s, she has adopted the most popular policies of her opponents – at least rhetorically.” Merkel embraced the phasing out of nuclear power, increased public spending on childcare and family benefits and offered a watered-down form of minimum wage to neutralize the center-left. A lurch to the left did not help the SPD regain much ground as core voters are still angry over painful reforms in the last decade that cut unemployment benefits and raised the retirement age, even though they are now credited with restoring German competitiveness. CREDIBLE SOCIAL JUSTICE? The policy dilemma confronting the European left is how to offer a credible, modern vision of social justice. Reformers such as Policy Network’s Cramme argue that the only salvation lies in emphasising “pre-distribution” through investment in childcare, education and job training, rather than perpetuating blanket welfare handouts. “Defending acquired rights may be legitimate, but it no longer makes you a catch-all people’s party,” Cramme said. “If you want to be a big-tent party again, you will have to combine reformist elements with social protection.” This leaves the center-left with awkward choices. Its big batallions of supporters tend to be among public employees and unionized industrial workers with strong job protection and secure pensions who fear privatization, and resist easier hire-and-fire regulations and later retirement. In some northern European countries such as Denmark, social democratic parties have pinned their fate on embracing an open, globalised economy and making social protection more selective. “We are trying to do four things at the same time,” Thorning-Schmidt said in an interview in her Copenhagen office, drawing four points on a piece of paper. “Fiscal constraint – call it austerity – (and) on the other side growth measures.

Europe lower as US debt deadline nears; Peugeot down 9%

debt ceiling before this Thursday’s deadline. — US political agreement? The pan-European Euro Stoxx 600 Index was softer on Monday morning after rallying in the previous two sessions with hopes of a resolution to the political impasse in Washington. Weekend talks between lawmakers to end the deadlock over the U.S. debt limit were unsuccessful , though there were signs of improvement on Sunday, when Senate leader Harry Reid said he had a “substantive” and “productive conversation” with Senate Republican leader Mitch McConnell. The U.S. government needs to raise the debt ceiling before Thursday, October 17 if it is to avoid a potential default on its debt. As global concerns over such a scenario grow, the chief of the International Monetary Fund, Christine Lagarde, said the situation was “very, very concerning” though she warned that ‘creative accounting’ was not the solution. Chris Scicluna, an economist at Daiwa Capital that market expectations are for a deal to be eventually forthcoming to avoid a disorderly default event. “But any agreement is unlikely to be swift in the finalization,” he said in a morning “With a significant probability that it will come after Thursday’s debt-ceiling deadline has passed – and also still seems more likely to offer a temporary rather than lasting solution to the impasse.” (Read More: As shutdown drags on, is more global easing coming? ) In European news, the Eurogroup of finance ministers from the euro zone are meeting on Monday to discuss, among other topics, Greece and banking supervision. The group meets on the eve of the meeting of the Council of the European Union (Economic and Financial Affairs – ECOFIN).