Alex Massie thinks the UK is not really undertaking austerity policies:
It’s true, I suppose, that the government could be running even larger deficits. True too that it could have cut taxes (instead of increasing them) as part of a “Dash for Growth” strategy. It is not true, however, that the struggling British economy is in difficulty because the government has adopted a slash-and-burn policy towards government spending.
It is certainly hard to make any case arguing that Cameron and George Osborne are succeeding at present but their failure can scarcely be attributed to austerity measures that have barely been implemented.
This chart is his evidence:
Look ma, no austerity! Spending has hardly dropped, even increased in some cases! Remember that austerity policy (reduced spending, increased taxes) hurts demand, that’s the problem with it. With that in mind, look again at the chart. Taxes are up net 10.2%. Spending not including interest payments is up net 0.3%. So you have a net hit on demand of 9.9%. Spending on interest is up, but in terms of demand, that’s useless. A 10% contraction is nothing to laugh at, even if the biggest austerity measures have not taken effect yet.
Joe Weisenthal posted this chart today, and I think it really tells the story:
The red line is the UK, and their nice, (almost) pre-crisis trend recovery suddenly stops in 2010, at which point it flat lines. Weisenthal captions:
The UK was recovering on a fine trajectory right up until early 2010, at which point UK growth hit a brick wall.
What happened in 2010? That’s when conservative David Cameron came to power with an agenda of reigning in the debt. Sound familiar?
520 Chestnut 
Leave a Reply