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Monday, May 05, 2014

'Britain’s Economic Growth is Not a Sign that Austerity Works'

Larry Summers:

Britain’s economic growth is not a sign that austerity works, by Lawrence Summers, Commentary, Washington Post: The British economy has experienced the most rapid growth in the Group of 7 over the past several months. ... Naturally enough, many have seized on Britain’s strong performance as evidence vindicating the austerity strategy that the country has followed since 2010 and rejecting the secular-stagnation idea that lack of demand constrains industrial growth over the medium term. ... Unfortunately, properly interpreted, the British experience refutes austerity advocates and confirms Keynes’s warning about the dangers of indiscriminate budget-cutting in the midst of a downturn. ...
Britain’s growth reflects a combination of the depth of the hole it found itself in, the moderation in the trend toward deeper and deeper austerity and the effects of possibly bubble-creating government loans. It may be better for the citizens of Britain than any alternative. But it certainly should not be seen as any kind of inspiration for other companies or countries. ...

    Posted by on Monday, May 5, 2014 at 12:33 AM in Economics, Fiscal Policy, Politics | Permalink  Comments (55)

          


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