Wednesday, November 14, 2012

Britain's success (NOT!) with austerity economics

Robert Hutton give s us a glimpse of state of the British economy under Prime Minister David Cameron's austerity economics during a depression in The Loneliness of David Cameron Bloomberg Businessweek 11/08/2012:

Cameron’s signature policy—an austerity plan meant to wipe out the structural budget deficit by the 2015 election—has caused pain among voters and is certain to cause more. The government will have implemented £37 billion ($59.11 billion), less than a third of the £126 billion of cuts planned, by the end of the fiscal year. Welfare payments for housing have been capped, forcing some poor people to move out of expensive areas such as London. Pay has been frozen for police, teachers, nurses, doctors, and other public-sector workers.

The success of the austerity plan depended on the economy returning to a growth rate of 2.3 percent in 2011 and 2.8 percent in 2012. It didn't; the economy is only now emerging from a double-dip recession. The National Institute of Economic and Social Research forecast on Nov. 2 that the economy in 2013 will be 5.3 percent smaller than forecast in 2010. The deficit-elimination target has been pushed back to the fiscal year ending April 2017. That means the government will go into the 2015 election promising further spending cuts and tax hikes.
You would think that at least Germany Chancellor Angela Merkel would be proud of him. But he's being so much of a pain in the rear on EU matters that he's probably not getting even that much out of this lovely experiment in austerity economics.

Greece, Ireland, Italy, Spain and Portugal have all had similar experiences.

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