New IPR report challenges effectiveness of austerity policies in UK and Eurozone
A broader debate is needed about austerity policies in Britain and Eurozone, according to a new report from our Institute for Policy Research (IPR).
The report, launched today (Thursday 9 July), brings together contributions from leading economists and policy analysts, and questions the ‘economic orthodoxy’ that underpins austerity policies.
As policy makers and economists grapple to digest the ramifications of Sunday’s ‘no’ vote in the Greek referendum, and Wednesday’s first Conservative Budget for over 20 years, it offers a coherent and distinctive view of the policy challenges we face, seven lean years after the financial crisis of 2008.
The principal arguments of the report are as follows:
- Austerity has concentrated on reducing the public sector deficit, mainly through cuts in public expenditure. The burden of austerity has fallen disproportionately upon the poor and the young.
- There is an alternative. This involves investment in the UK’s economic capacity, as a ‘post-industrial’ low-carbon economy. Government must play a leading role, investing in infrastructure, human capital and the science base.
- Instead of austerity and insecurity, we need to provide security for all of our citizens and to invest in everyone’s capabilities.
- Internationally, governments must work together, if they are to regain some control over their economic and social destinies, instead of leaving these to the international markets. This includes the taxation of footloose multi-national corporations.
- In the Eurozone, as in the UK, austerity must be replaced by public and private investment, especially in new green technologies. Without these, Europe is likely to face stagnation for the rest of this decade. This could be politically destabilising.
- The austerity debate connects to other policy debates. The choices we make will shape our societies through much of this century: their cohesion, their prosperity, their democratic institutions, their environmental sustainability and their global influence.
Professor Hugh Lauder, the Director of the IPR, explains: “Many parties, across the political spectrum, in this country as well as in Europe, have bought into austerity policies. So have the media. These policies of austerity however are dividing societies and policy communities across Europe. It is time the debate was broadened to ask fundamental questions about the wisdom of this whole approach. That is what this report does.”
This is the first in a series of ‘IPR Spotlights’ that the Institute will publish.
Other contributors include Lord John Eatwell (President of Queens' College, Cambridge and Chair of the Advisory Board of the IPR), Professor Paul Gregg (Labour Market and Welfare Reform expert and member of the Social Mobility and Child Poverty Commission) and Professor Mariana Mazzucato (Professor in the Economics of Innovation at the Science Policy Research Unit, University of Sussex).
Established in 2013, the Institute for Policy Research (IPR) brings together many of the University’s research strengths, so as to foster inter-disciplinary research of international excellence and impact. It bridges the worlds of research, policy and practice and it addresses some of the major policy challenges we face on a local, national and global scale.
To access the full report see http://www.bath.ac.uk/ipr/policy-briefs/reports/alternatives-to-austerity.html.
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