STUDY Alternatives to Austerity Progressive Growth Strategies for Europe MICHAEL DAUDERSTÄDT AND ERNST HILLEBRAND(Eds) December 2013  Before the crisis there were different growth models in Europe: property bubbles in Spain and Ireland, state spending in Greece, hypertrophied financial sectors in the United Kingdom and Cyprus. All of these were based on growing, mostly private debt. They caused large current account deficits, and imploded in the financial crisis. State-led bank rescues to stabilise the financial sector massively increased state debt.  The Greek state debt problems and the mistaken response of Europe and Germany transformed the financial crisis into a state debt crisis. This offered an excuse to force austerity on the crisis countries with cuts in wages and social spending. Growth collapsed, unemployment and poverty increased, but no amelioration of state debt ensued.  The ECB’s belated low-interest policy ended the state debt panic in the financial mar­kets but obviously cannot create new growth. That would require new investment, presupposing a banking sector recapitalised through a banking union and coordi­nated European growth initiatives. It also implies improving business competitiveness in the crisis countries and more equitable income distribution.