Nearly all of the "austerity" in Europe is due to raising of taxes; especially on highest earners and VAT increases.
From Daniel Mitchell at RealClearPolitics:
The PIIGGS imposed no austerity at all on the public sector in the past five years.Government spending on bailouts, subsidies, grants, salaries and entitlements commands a much larger share of these economies than it did just a few years ago.
European austerity has been focused on the private sector — namely, taxpayers with high incomes.
That is the second thing the PIIGGS have in common. The highest income tax rate was recently increased in every one of the troubled PIIGGS except Italy (where it was already too high at 43%). The top tax rate was hiked from 40 to 46.5% in Portugal, from 41 to 48% in Ireland, from 40 to 45% in Greece, from 40 to 50% in Great Britain, and from 48 to 52% in Spain.
I’ve already
discussed their unfortunate propensity to hike value-added tax rates. Alan explains that they’re doing the same thing for income tax rates.
In other words,
Veronique de Rugy is correct. The “austerity” in Europe generally has been in the form of higher taxes, squeezing the productive sector to prop up the public sector.