Mariana Mazzucato / People / FINNOV: Finance, Innovation & Growth

Austerity Plans

Austerity plans are based on the wrong diagnosis of the wrong problem -- and may plunge Europe into depression. Governments must be able to spend strategically to encourage growth, or the crisis will only get worse.

Wake Up George

The danger of cuts without growth

Today [29 November 2011] the Office of Budgetary Responsibility (OBR) is expected to downgrade the UK growth forecast to less than 1%. This is bad news because if the UK economy does not grow, the major cuts in spending will not achieve their goal of reducing the deficit, and hence have caused much suffering -especially for the weakest elements of society - for nothing. Cuts without growth don’t allow the deficit to fall because unemployment comes with a heavy cost to the public purse (e.g. unemployment benefits, loss of tax income, crime etc).

EZ problems and Contagion

Contagion today is causing even the ‘core’ European countries to be affected by investors’ fear of the EuroZone (EZ) crisis, causing a mass selloff of EZ bonds which has caused the spread for French yields over German Bunds to hit a record high, and the Euro to fall. Even the stable Scandinavian countries, like Finland, are starting to get affected.

Berlusconi and Eurocrisis

What exactly is the eurozone crisis? Is it a financial crisis? An economic crisis? Actually, it's a growth crisis. And as such, it must have growth solutions. Instead we are being bombarded every day with theatrical new developments (Papandreou's referendum, Berlusconi's wavering on reform and elections) that would make us think that it is all the fault of some corrupt and/or lazy politicians. Or the result of Europeans, and their governments, refusing to live within their means. The solution, we are told, is better politicians and belt-tightening.

UK Is Getting Left Behind

What is often referred to as the ‘financial crisis’ is in many ways a ‘real economy’ crisis. It is no coincidence that two of the biggest problems, Greece and Italy, have the lowest productivity figures in Europe, and little spending on key areas that cause growth like R&D.