Europe faces lost decade

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The austerity measures being rolled out in countries across Europe will have a devastating effect on the living standards of its population, an economist told CNBC Friday.

“These reforms are going to be devastatingly impacting on the population in these countries.

We are looking at a decade of lost living standards across most of Europe. The austerity measures are part of the solution but they are also going to deepen the downturn,” James Shugg, senior economist at Westpac, told CNBC.

He added that countries would be facing a prolonged period of hardship because tax revenues would also be hit.

“Europe needs to pull out all the stops and learn from its mistakes to ensure it can come through this with the least possible damage.

There is no easy solution to this, it will be hugely painful,” he said.