The programme could provide Europe with millions of fairly paid jobs, substantial tax revenues and help to address climate change
This week will be a momentous one for Europe. On Thursday the European Central Bank (ECB) is expected to start the e-printing presses rolling with a massive Quantitative Easing (QE) programme to attempt to tackle stagnation and deflation in the Eurozone.
Then on Sunday Greece goes to the polls. If, as expected, the left wing Syriza party wins the majority of votes, it will mark a fundamental challenge to the ongoing disastrous Europe-wide austerity programme.
That in turn will provide further impetus to the growing European anti austerity movement, currently being championed in this country by the Green Party.
If such a QE programme is genuinely to stabilise Europe’s economy and create jobs, it will need to be very different from the expected ECB QE programme which, like its £375 billion UK predecessor, will simply buy government bonds as a way of injecting cash into the EU economy.
The bizarre assumption behind this approach is that risk-averse capital markets, corporate sectors and constrained banking systems can be nudged into supporting the productive economy.
That did not happen in the UK, and I do not expect it to do so in the Eurozone either. Instead the planned QE programme will, as it did in the UK, mostly benefit the banks and investors by inflating house prices, the stock market and commodities.
If QE is to be adopted, it needs to be ‘Green Infrastructure QE’. I am a member of the Green New Deal group and today we are publishing ‘Europe’s Choice – How Green QE and Fairer Taxes Can Replace Austerity’. This calls for all EU countries to use QE to fund investment in the continent’s renewable energy supplies. It could ensure all buildings are energy efficient and revitalise local and regional public transport links. Paying a living wage would help to boost governments’ tax revenues and overcome the present lack of long-term effective demand in the economy.
In the UK it has been estimated that nearly £500bn of investment in new low-carbon infrastructure is required over the next 10 years, of which £230bn will be required for energy efficiency alone. We estimate that a European ‘Green Infrastructure QE’ programme would need funding of the order of €500 billion (£380 billion) per year over the next decade.
This programme could eventually provide the countries of Europe with millions of fairly paid jobs, substantial tax revenues and – crucially – help to address climate change.
The question always asked about such a proposal is how can it be funded and whether it would increase the public debt burden for future generations. The answer is that there are potentially significant amounts of money available to pay for such a green rebalancing of the European economy and the consequent reduction in government debt.
In the very short-term, funding could come from our proposed ‘Green Infrastructure QE’; in the medium term, substantial funding could come from a more effective and fairer increase in the tax collected in Europe from wealthy individuals and companies.
The Green New Deal Group’s paper estimates that tax evasion (illegal non-payment or under-payment of taxes) in the European Union is approximately €860 billion a year. Tax avoidance (seeking to minimise a tax bill without deliberate deception), might be of the order of €150 billion a year.
Such non payment of taxes might cost the governments of the European Union €1 trillion a year. In Greece and the UK, where anti-austerity parties such as the Greens are on the rise and elections are imminent, these losses might amount to €19 billion for Greece and for the UK the tax gap may be as large as £120 billion a year.
This week Europe stands at a cross road: it can go down the usual QE path that benefits the banks and the asset rich, or it can ensure a greener future funded by a massive ‘Green Infrastructure QE’ programme and the effective collection of unpaid taxes.
In doing so, it could also steer Europe away from the discredited ‘austerity road to ruin’, and accelerate our eventual independence from economically precarious and environmentally destructive fossil fuels.
Caroline Lucas is the MP for Brighton Pavilion. Follow her on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.