Europe’s austerity-to-growth shift largely semantic

To listen to some European leaders, especially in France, you would think the era of austerity was over and the euro zone was going full steam ahead to revive economic growth.

In a striking change of tone, European Commission President Jose Manuel Barroso said last month that austerity - the policy of cutting public debt by reducing spending and raising taxes - had reached the limits of public acceptance.

In reality, the shift is more in words than deeds. The rhetoric has changed but there has been no policy U-turn.

To be sure, the European Commission is granting governments more time to reduce their budget deficits to EU limits, chiefly because recession had made those targets unattainable.

Euro zone states have a breathing space because bond markets have ceased to panic since the European Central Bank said last year it would act decisively if necessary to preserve the euro.

The EU emphasis is now on reducing “structural deficits” - an elastic measure meant to take account of the economic cycle - and on reforming labour markets and pension systems, opening up more sectors to competition and easing business regulation to improve countries’ growth potential.