Economy ‘trapped in growth crisis’

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Britain’s economy is trapped in a growth crisis, rather than suffering from spiralling debt troubles, and it’s only going to get worse, an economic expert from Sheffield University is set to argue today.

At a conference in Sheffield, Professor Colin Hay, co-director of the Sheffield Political Economic Research Institute (SPERI) will tell an international audience that he believes we are in a crisis of growth, not of debt.

The inaugural SPERI conference opens today and will run until Wednesday, July 16.

Professor Hay’s speech will argue that the current economic crisis will only be exacerbated by deficit reduction and cuts in public spending.

Speaking prior to the conference, he said: “If the solution to a crisis of debt is austerity, then the solution to a crisis of growth arising from the exhaustion of the old, inherently unstable, growth model is to find another.

“But herein lies the problem. For growth models are not easily established, especially in economies whose recent engines of growth – financialisation, asset appreciation and equity release - are profoundly broken.

“It is important in recalibrating our economy that we question the value of growth on its own, since it is certainly not the only way to measure the success of an economy.

“But in the short to medium term we should settle for growth.

“For the disastrous combination of environmental unsustainability and non-growth is the worst of all possible worlds and the transition to environmental sustainability is more easily made from growth than its absence.”

At the conference in Sheffield this week, experts will look at the potential problems that are “suffocating” growth, such as monetary policy, rationing of credit and commercial lending and a growth model “based on asset and house price appreciation.”

This first SPERI conference is entitled “The British Growth Crisis: The Search for a New Model.”