The fallout of the real issues which were discussed during the European Council meeting last week is beginning to emerge.

While the meeting was reported as a routine one and one which focused on low key affairs, it is no coincidence that France and the UK announced massive cuts and tax increases in order to reign in their burgeoning deficits. The UK is set to announce its budget today and France has said that it will announce full details of the cuts in its yearly financial evaluation. Both are pointing at huge spending cuts and a big increase in taxation.

In another move, the International Monetary Fund has moved to allay fears about Spain in an attempt to soothe the markets’ fears about the euro and its stability. In yet another manoeuvre this weekend, the European Central Bank stated that it is seeking tougher Eurozone rules. The statement by President Jean Claude Trichet would have been unthinkable in the ‘good old days’ when the bank was an aloof figure that merely kept an eye on European finances. But today, where it has become very clear that books were cooked and figures fudged on a regular basis – the bank has stated its intentions to monitor finances more acutely and to take a role in the buying and selling of government bonds. Moreover, during the Council meeting, the European Commission made no bones about telling individual members states – Malta included – where it thought that systems were unsustainable in the long term.

The Prime Minister has taken the advice on board and dedicated his Sunday political speech to tell the nation that Malta needs to safeguard the sustainability of public finances in the long term.

Some may argue that this jars with the statement made by Tonio Fenech last week, as reported by this newspaper in an interview, where he said that austerity is not the way forward. In fact, PL leader Joseph Muscat said on Sunday that pension reform re-evaluation is a form of austerity.

This is not entirely correct. Other European nations such as Greece and France have been forced into taking drastic austerity measures just to keep from default – in other words, they are saving money now to pay back bills which they are facing today. It’s like receiving your pay cheque, living beyond your means and blowing it all at one go and then having to cut back for the rest of the month.

What Malta is being told is that it must reform certain sectors to ensure that we do not face these problems in the future. So, reforming our pensions and health sectors are not exactly austerity measures in themselves, but more a case of prevention rather than cure (painful at that).

People will feel the pinch – one is certain of that. But it’s definitely not a case of having to reduce a hopelessly out of control national debt, it is a case of preventing that from happening by taking measures now.

And this is where we have to look at the issue of political responsibility. As we have learned in this crisis, there is nothing which is more infectious than worry. The markets worry, the governments worry, the banks worry and we are in the sorry state that we are. The only thing that is keeping the eurozone afloat at the moment is a degree of optimism.

We must reform sectors which are not going to be sustainable in the future, but equally, we expect – as Mr Fenech told this newspaper – that the government keeps a careful watch on cost management. Failure to do so would not only mean that our economy would suffer – but it would also incur the people’s wrath. At least, the dockyard losses have been consigned to history.