As France Lowers Retirement Age, Germany Better Be Ready To Pay For Austerity's Unwind
As noted earlier, Europe has been so obviously crippled by years of brutal austerity (which, as we pointed out before never actually happened), that it has had to experience the supreme indignity - a miserable two years of plunging flat GDP growth. Because under the old normal, it appears that unless one is issuing massive debt, pardon "growing", society grinds to a halt. Well, it appears that France has finally had enough, and as of today, "the French government approved a measure Wednesday that will lower the retirement age to 60 from 62 for a narrow group of workers, partly reversing unpopular pension reforms made by former President Nicolas Sarkozy as he sought to improve France's public finances." Obviously, this means that more welfare funding will have to be sourced as all else equal, this means less money will be produced by the country's workforce, and more money will be consumed by its retirees. Who will do it? Why German of course. Because after Merkel caved first on Greece, and then on Spain, it is now game over for German "prudence" and everyone will line up at the trough. Congrats Berlin: we can only hope you have discovered those magical money-growing trees. You will need them.
From Dow Jones:
The reform, which is less sweeping than promised by new President François Hollande during his election campaign, comes just days ahead of legislative elections in France and is likely to further fuel questions about Mr. Hollande's ability to make a serious dent in France's deficit against a backdrop of the deepening euro-zone crisis.
The government's decision will authorize people who contributed to the pension system for more than 41 years to retire at 60, Social Affairs Minister Marisol Touraine told reporters after the weekly cabinet meeting. The government will also take into account maternity leave and unemployment periods in the contribution period, she said.
Ms. Touraine said the reforms will cost €1.1 billion ($1.37 billion) in 2013 and €3 billion in 2017. The extra expenditure will be covered by increased contributions by employees and employers, she added.
The measures will allow people who started working early in life and who have paid the required amount of pension contributions over the course of their working life to retire at age 60, instead of the normal minimum retirement age of 62.
Ms. Touraine said 110,000 people will be affected by the reform.
We don't know about 110,000 people but we know about one: Angela Merkel. Have fun paying for French early retirement as austerity dies a miserable death.