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Who is winning the argument in Europe on austerity, growth and the connection between the two?

I had a lively debate on this question this week with the BBC's veteran diplomatic correspondent James Robbins on the World Service.

I use the word "veteran" advisedly, but as James reminded us, he has been covering European issues for so long, he was there in Maastricht in 1992, when the basic rules for the single European currency were first agreed and signed into law.

In the programme we also heard from some distinguished economists from around Europe, all with a slightly different take. 

If they can persuade the German Chancellor that it makes sense, even from the standpoint of the public finances, to balance budgets over a longer time frame, they might actually be able to reach a deal. 

Lest we forget, this was precisely the argument that Germany made to its European partners a decade ago, in explaining why it was not going to get its budget deficit back to below 3% overnight.

Germany's deficit was above 3% in 2001, 2002, 2003, 2004 and 2005. 

Perhaps all Chancellor Merkel needs is a helpful reminder?

The I in this case is Stephanie Flanders, BBC Economics editor, 11 May 2012

Man behöver inte tro på Keynes teorier från 1930-talet för att se både
den politiska och ekonomiska faran i en finanspolitik som spär på nedgången.

Det långsiktigt nödvändiga – att sanera skuldsatta ekonomier – är inte en klok strategi i ett akut läge.
Peter Wolodarski, DN 13 maj 2012

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