Watching the pension reform protests in France this week, I’ve been thinking about an interview I did this summer with Professor James Darroch of the Schulich School of Business at York University. We talked about the austerity programs that were being introduced at the time, and I asked him about the signals we should watch for to determine if the region had in fact exited the sovereign debt crisis plaguing Greece, Portugal and other European countries.

He said to watch for the political reaction to spending cuts. Specifically (in remarks I didn’t include in the blog post I was interviewing him for), he said to watch for mass protests that would test the will – or actually threaten – the ruling governments of those European countries implementing cost-saving programs. “Are the austerity measures real?” he asked, rhetorically.

Of course it is too early to tell whether the French strikes signal a new phase in the struggle between government austerity and the labour movement. But I think it is fair to say that we don’t yet know what the outcome of these demonstrations will be.

Christiane Amanpour, host of This Week on ABC, interviewed France’s always impressive finance minister Christine Lagarde on Sunday. Amanpour asked Lagarde if her country’s pension reform will go ahead, despite the political pressure. “We have to, in the interests of the next generations,” she said.    “[T]he only way to fix it and to make sure that it’s financially stable and sustainable is to increase the retirement age by two years. It’s only two years. And in the last 50 years, people have gained 15 years of longevity.”

It’s hard to argue with Lagarde’s defence of pension reform, but what’s clear to me from her “we have to” response is that the impact of the protests is simply undeterminable at this time.

That may prove unimportant in the long run. But for now, the protests in Europe deserve close attention (there were demonstrations in multiple European capitals last month).

If political pressure blocks the austerity programs before they’re able to accomplish what they’re designed for, we’ll be left with the worst possible scenario in the region: ballooning deficits without the benefit of stimulus spending to boost the national economies. That could further stall the global economic recovery.