13 Mar 2013

Spat over austerity measures plays out in media

1:14 pm on 13 March 2013

A spat has broken out between Nobel prize winning economist Paul Krugman and the man in charge of enforcing Europe's fiscal cuts Olli Rehn.

In his New York Times blog, Dr Krugman accused the European Union's top economic official of pursuing a so-called "Rehn of terror", for sticking with austerity measures despite evidence they're not working.

Mr Rehn has hit back, telling a Finnish paper that the economist had put words in his mouth that would be termed in the Finnish Parliament a modified truth - a parliamentary euphemism for a lie.

Mr Rehn has the task of overseeing European fiscal rules that are strained by the demands for budget discipline by states like Germany and Finland, while Southern Europe struggles to deal with the rising social and political tension stemming from austerity meaures.