What will growth policy have to look like in a fiscally compacted Europe? Clearly any illusion of budget stimulated growth policy will have to go away.
Sentiment: NEGATIVE
The U.K. and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not. You've got to spend money.
If we don't get a grip on government spending, there will be no growth.
Well, I think lower taxes and less regulation would actually promote growth.
My advice would be, as you consider fiscal policies, to keep in mind and look carefully at the impact those policies are likely to have on the economy's productive capacity, on productivity growth, and to the maximum extent possible, choose policies that would improve that long-run growth and productivity outlook.
Having your fiscal house in order and having a more manageable macro-economic future is going to be very useful in creating growth.
I'm a pessimist about the euro, but not about Europe. So the southern periphery, Spain, Italy, Greece, leave - Italy might be the first to go - and the rest stay. That will work just fine. But unless they want to give up democracy, I don't see greater fiscal union as the answer.
I think that the EU with the Lisbon agenda has put the right emphasis on growth and employment.
Monetary policy cannot do much about long-run growth, all we can try to do is to try to smooth out periods where the economy is depressed because of lack of demand.
Fiscal decentralisation does not lead to higher economic growth because economic growth is much more driven by factors other than taxes and spending, e.g. increases in technological progress and improved human capital.
We need to have a pro-growth policy put in place that offers people hope and offers the opportunity for businesses to expand and for them to have confidence in what the world is going to look like for the next two or three or four years with respect to economic policy.