Eurozone Crisis Is Hitting Every Country


IN a week when Greece and Spain witnessed massive strikes and demonstrations against austerity measures – designed to drive the working class and youth into abject poverty – it became clear that, far from being a crisis that could be contained to the ‘poor south’, it is a crisis that is rapidly engulfing the ‘affluent’ economies in the north.

This week, the second largest economy in Europe, France, will be faced with cuts amounting to 30 billion euros to be imposed by the social-democratic government of Francois Hollande.

These cuts will be imposed against a backdrop of rising unemployment which has reached a record three million.

Taking into account part-time workers seeking full-time work, this figure is closer to 4.4 million.

Hollande was elected last May on the promise that he would revive the collapsing French economy through promoting ‘growth’ and now he is prescribing exactly the same medicine as every other government in Europe – savage cuts in public expenditure along with presiding over a massacre of jobs.

Never before has the complete bankruptcy of reformism been so graphically demonstrated in such a short space of time as in the case of the Hollande presidency.

For there can be no reformist solution to the collapse of the banking system and the consequent collapse of manufacturing industries throughout Europe.

Nothing illustrates this more graphically than the terminal crisis facing car manufacturing across the Continent.

PSA Peugeot Citroen, the second largest car maker by volume after Volkswagen, saw a 13% slump in car sales for the first half of the year, leading to a catastrophic fall of 61% in its share price.

In July, the company announced 8,000 jobs would be axed in France on top of the 3,500 sackings announced at the end of last year with the closure of its Aulnay plant – a closure that led to scenes of rioting by workers.

General Motors in Europe is similarly on the ropes with losses that caused GM’s profits to fall by a massive 41%, with their European operation racking up losses of $360 million, and with most analysts expecting that they will close down all their plants in Europe, hitting the UK and Germany the hardest.

With Ford announcing ‘hundreds’ of jobs to go as sales fall and they amass losses of £630 million and with the Italian car maker Fiat also registering record decline, the big volume, mid-range car makers are almost certainly doomed as car sales for Europe dropped by 7.1% – in southern Europe the drop was over 20%.

Nor is the picture looking good for the ‘prestige’ car makers like BMW and Mercedes.

Despite boasting increased sales, a close examination of the figures reveal that these have been achieved through large price cuts on their models.

BMW may boast that it has increased car sales but the fact is its share price fell this year by 3% (previously it had risen by 60% over the past four years) as its profits were cut.

BMW derives only 30% of its profits from Europe, the rest comes from the ‘emerging’ markets of China and India. And as these contract under the impact of the world crisis, no car maker – prestige or otherwise – is going to survive, leading to the loss of millions of jobs not just in the industry but amongst all the other industries that supply it.

The working class of Greece, Spain and Portugal are set to be joined very rapidly by workers from France, Germany and the rest of Europe in a life and death fight against a capitalist system that cannot provide jobs, pay or any of the basic requirements of life for the working class.

This is a struggle that can only be won through the victory of the European socialist revolution.