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Europe To Change "Deficit Calculation" To Make Economy Appear Stronger

Tyler Durden's picture





 

In a world in which when the numbers don't comply with the propaganda, the only recourse is to change the rules, and if that fails, change the numbers themselves (see Fukushima radiation count, US GDP, Employment numbers, anything out of Europe, etc.) it was only a matter of time before that last sticking point of the grand made up narrative, the lack of economic improvement in the European despite evil, evil austerity (which somehow has resulted in record debt which is rising faster than expected virtually everywhere in Europe) resulting in unpalatable deficits, was magically "fixed." This was resolved moments ago when as the AP reports, "European Union finance officials have reached a preliminary agreement to change the way the bloc determines some deficit figures, which might lessen the pressure for austerity measures in crisis-hit economies." In other words, Europe's "recovery" will now be based on even more made up numbers. One wonders: since Europe is finally admitting that the numbers are fake, i.e., lying, are things finally getting truly serious again?

More on the sad state of European PR (propaganda relations):

An EU official said Thursday the change to the calculation of the structural deficit would have "very significant" positive consequences for Spain because of its labor market structure, and somewhat less so for Ireland, Greece and Portugal.

 

While national government officials were involved in this week's decision by a group of experts, an agreement cannot be taken for granted. Officials from more hawkish European creditor nations might resent the measure as an attempt to lessen the pressure on heavily indebted nations for what they deem to be necessary budget cuts and structural reforms.

 

The nature of the change is very technical — changing the methodology of measuring the output gap between potential and structural growth — but it could have significant repercussions. The result is used to calculate the structural deficit figure — that is the deficit adjusted for the cyclical strength or weakness of the economy — upon which the European Commission bases its policy recommendations.

 

Spain is struggling to overcome record unemployment of about 26 percent. The change could allow the government a slightly looser fiscal stance, supporting growth.

 

The official, who spoke on condition of anonymity because of the sensitivity of the issue, said the working-level agreement on the "superior methodology" still needs approval by a meeting of representatives from the bloc's 28 member states next week.

Or, to paraphrase Jean-Claude Juncker, "when it gets serious, you have to use superior methodology."

 


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