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Time: 1.00pm - 2.00pm
Speaker(s): Ewa Karwowski (University of Hertfordshire)
Political Economy Research Group
PERG is a group of researchers who believe that effective demand, institutions and social conflict are of fundamental importance for the understanding of economic relationships and outcomes. Furthermore economic analysis should be embedded in a pluralist approach, allowing different schools of thought providing a broad basis for scientific progress.
Post crisis, local governments' budgets have been drastically cut in Britain. Similar budgetary strains had serious consequences in the past, leading to major restructuring in local governments' functions. This paper interrogates the spatial dynamics of short-term municipal finances by putting into dialogue the political economy perspectives on financialisation with the economic geography literature on urban governance. Using data for over four hundred municipal authorities in Britain, we examine locational underpinnings of spending cuts with respect to changing financial practices. We find that in addition to the spending cuts, austerity increased risk and uncertainty for local governments, leading them to resort to short-term borrowing for current spending to preserve key services in breach of regulatory guidance. Effectively, an internal market for inter-council lending and borrowing has been created based on market principles in which local authorities with surplus cash and reserves have extended credit to those with liquidity problems. On the asset side, the austerity programme forced local authorities to embrace financial logics through a spectacular shift from cash and deposit holdings to investment in money market funds and credit extension as they have strived to generate as much income as possible to fund services at risk.
Ewa Karwowski is a Senior Lecturer at the University of Hertfordshire. Her research focuses on the operations of large corporations, in particular how firms' behaviour has changed in a financialised setting.
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Contact: Dr Christina Wolf
Dr Christina Wolf