EU member governments are discovering that without currency devaluation to help them, fiscal reduction is one of the few tools they have to enhance competitive advantage. Unruly Britain had been accused of leading the way by France, which has seen Britain as a kind of unruly youngster, unwilling to go along with the greater European habit of intervention as the cure to all economic ills. But that's all changing quickly, with Germany leading the charge. The successful passage of Germany's tax reforms in mid-year is already increasing pressure on other Europeans to follow through. France and Italy have sped up their tax cutting plans.
Process slowing The process is unlikely to slow for several reasons.
The simple one will be an element of competitive adjustment. But it is also likely that a culture change will develop that will stimulate more reductions. Germany's move is widely and warmly accepted in economic circles as evidence of determination by Europe's biggest economy to tackle structural reforms. There are still many problems in Germany, though, like the need to liberalise the L nder banking system, which will have to be tackled later and in other ways. Small consolation for Europeans facing an uncertain economic future in the much shorter term maybe - but a comfort to know that when the next recovery cycle comes around, the European Union could be better placed to meet it.