Stiglitz Says Europe Faces ‘Disastrous’ Budget Austerity Drive
[February 02] Many European countries are pursuing “excessive austerity,” risking a marked slowdown in economic growth, Nobel Prize-winning economist Joseph Stiglitz said. “There’s this disastrous policy that even in the countries that don’t need to have austerity,” such as the U.K., they “are going for much more excessive austerity than they need,” he said at an investor conference in Moscow today. “We are already seeing around Europe the consequences of this austerity. The clear implication is that growth will be slower.”
European governments are stepping up efforts to narrow budget deficits after the region’s sovereign-debt crisis threatened to trigger defaults and undermine the euro. Leaders are considering boosting the 750 billion-euro ($1 trillion) rescue fund and adopting more stringent deficit rules to avoid the future turmoil after rescues of Greece and Ireland. While both those nations had “no choice” but to tighten fiscal policy, measures adopted by some other countries such as the U.K. aren’t justified, Stiglitz said. Britain, where the economy contracted in the fourth quarter, is already seeing the fallout, he said.