The UK should fund the necessary public investment program with the introduction of a significant land and property tax. In the short term the UK clearly needs to invest in the productive capacity of the economy (human capital stock, public capital stock, environmental sustainability). The borrowing this entails should be backed by the value of the assets generated by this investment. If the investments are productive they should lead to a rise in productivity of the UK and so a rise in the value of wealth in the UK. Thus a natural way of financing the necessary inverstment would be to tax the beneficiaries of this investment with a tax on all land and property in the UK.(i.e. assets which benefit from the investment but which cannot be moved to avoid taxation). The ONS estimates the value of land and assets-over-land to be over £5Trillion compared to a GDP of c£2Trillion. Thus a 1% tax pa would be worth 2.5% of GDP pa. Such a tax wouldn't need to be collected immediately. It could be collected when the land is sold or transfered, the tax claim accumulating each year as a government asset. After 50 years of no-sale or transfer the state would have the right as majority shareholder to sell the land/property on the open market (with appropriate safeguards to ensure that owners who had been continuously living in the property for 50 years wouldn't be evicted). Would the tax cause land values to crash? If the public investment is productive then it shouldn't but even if they fall by 50% the tax could still back a large spending program. Plus a property price fall should cause a rise in disposable income of the younger generation which may also lead to increased growth and investment which would be equilibriating. Thus in short the UK should fund the necessary investment program by borrowing backed by the introduction of a significant land and property tax.

If the EU had the state capacity to oversee the increased spending then Yanis Varoufakis would be right. An EU bond issue and spending program would be the best way to address the current crisis. However as Economists we know the importance of 'State Capacity' (Besley and Persson AER 2009) and 'Institutions' for economic growth (Acemoglu and Robinson 2012)- particularly legal and fiscal capacity for collecting taxes, upholding property rights and limiting corruption. Besley and Persson show how state capacity can grow with sufficient `common interest public goods' and the current crisis has highlighted plenty of those e.g. huge international and national externalities involved with public health, knowledge creation (Media and R&D), income inequality and the environment (EC101) as well as the benefits of international cooperation and risk sharing. However without the necessary state capacity at the EU level, the trillions of euros borrowed may be used to prop up inefficient banks or diverted into the accounts of reportedly corrupt anti democratic authorities (see e.g. Bloomberg April 2020 https://www.bloomberg.com/opinion/articles/2020-04-07/hungary-s-viktor-orban-profits-from-eu-friends-and-funds ). This would set back the prospect of european cooperation for decades or even centuries. People don't work hard and pay taxes for that. For EU bonds to succeed there has to be an acceptance by the European public of an EU level administrative oversight with the ability and willingness to direct funds to where they are most needed and to deny funds to inefficient and corrupt entities including some states. This can only really occur with a pan EU democratic mandate with the power to overrule individual state's preferences (for this particular tranche of spending). The EU as a whole will benefit from the increased spending and from the reduced prospect of prolonged recessions in highly indebted parts of the EU and so it seems efficient that its costs should also be shared to some extent. Will the EU public be prepared to do this? Will the current crisis highlight enough `common interest public goods' for the State Capacity in the EU to develop? I don't know, but for Yanis Varoufakis' prescription to work he needs this state capacity in place.