%0 Generic
%A Mazzucato, Mariana
%A Ryan-Collins, Josh
%C London, UK
%D 2024
%F discovery:10196781
%I UCL Institute for Innovation and Public Purpose
%T IIPP written evidence submission on 'Sustainability of the UK’s National Debt Inquiry'
%U https://discovery.ucl.ac.uk/id/eprint/10196781/
%X There is no magic number when it comes to debt sustainability. The  sustainability of public debt depends on what the government is investing in. In  other words, how debt is being used is more important than the level of debt.  Contrary to the discredited argument of economists Carmen Reinhart and  Kenneth Rogoff, which linked government debt to weaker economic growth and  promoted austerity policies, it is critical to understand that government  spending can take the form of investments in the long-range drivers of  productivity and growth. These drivers include, for example, education and  training, research and development, and wider factors that are critical to  building an innovative, resilient, sustainable and inclusive economy.  Investment-led sustainable and inclusive economic growth can expand  the productive capacity of the economy, which can in turn contribute to  a fall in the debt-to-GDP ratio.  How this investment is structured is also important. Mission-oriented policies  can turn big challenges like climate change into market opportunities,  catalyzing cross-sectoral innovation and investment oriented around  tackling these challenges, leading to spillovers (Mazzucato, 2021). This can  in turn generate a multiplier effect (i.e., where the growth enhancing impacts of  government investments are greater than the increase in debt) (Deleidi et al.,  2019).
%Z This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.