As Eurozone economies tremble, public debt reaches unprecedented levels in the US and Japan and uncertainty stalks China, Brazil and other rising economies, politicians across the globe call for harsh cuts in government spending. But austerity only wrecks economies further, pushing them into a vicious circle that ultimately results in recession. Spending cuts mean job losses and falling demand for goods and services. This in turn results in firms selling less, wages going down and unemployment rising even further. Then, as demand collapses and economies shrink, debts become unpayable. This short guide of the New Economic Foundation proposes some ideas on how to break this vicious circle without returning to the old model of chronic dependence on carbon and debt.
February 20, 2012
To see The New Economic Foundation’s report “How Did We Get Here?,” please click here.