Skip to main content

Sorry this diary is so brief. But sometimes the truth is simple.

Another diary asks Did U.S. just implement more severe austerity measures than Great Britain, Spain?. There's a simple answer to this...

If you want a taste of what real neoliberal austerity feels like, come to Britain. Today the Guardian reported
A shock fall in activity in Britain's services sector at the end of last year has put the economy on the road to a triple-dip recession, as economists predict the UK will be stripped of its triple-A credit rating.

The services sector – which accounts for three-quarters of Britain's economic output – shrank for the first time in two years in December, suggesting the UK economy contracted in the fourth quarter. If output drops again over the next three months, the UK will fall into its third recession in five years – an unprecedented triple dip.

The Labour Government responded to the financial crisis of 2008 with a stimulus package, much like that put together by the incoming Obama administration in early 2009. Growth resumed. But then the Conservative Lib Dem Coalition was formed in the wake of the inconclusive 2010 election, and put forward a radical package of cuts which enforced a massive shrinkage of public sector investment, benefits, and procurement just at the worst moment, in Keynesian terms.

Back in the UK, we're relearning the hard way the lessons of the 1930s - that you don't deleverage public sector spending when private deleveraging is so high. We've relearned the paradox of thrift on a massive scale, as the government, in an attempt to cut public spending, has miscalculated the multiplier effect, which in turn has forced them to borrow more.

Let’s call it failure
John Lanchester looks at the nation’s finances

Saying ‘I told you so’ is supposed to be near unbeatable fun, so it’s disappointing to report that, in the case of the government’s handling of the British economy, speaking for myself, no fun is being had. As George Osborne’s autumn statement made clear, the scale and speed and completeness with which things are going wrong are numbing. The Tories went into the 2010 election with a manifesto commitment to reduce the structural deficit – the amount by which the government’s spending in any given year exceeds its income, excluding temporary effects from the downturn. The first point in their economic policy read as follows: ‘We will safeguard Britain’s credit rating with a credible plan to eliminate a large part of the structural deficit over a Parliament.’ How? It’s on the next page: ‘We will cut government spending to bring the deficit down and restore stability.’

That’s what they set out to do. In June 2010, in his first budget, Osborne said the structural deficit was 4.8 per cent, and that with three years of reduced spending, the figure would be down to 1.9 per cent. So how’s that going? Well, by the end of those three years, after £59 billion of tax rises and spending cuts, the figure is set to be....  4.9 per cent – higher than it was when the coalition came to power. Osborne’s single biggest economic ambition was to get the deficit down, but he hasn’t managed it, and has had to abandon his noisily announced target to get rid of most of the deficit in a single parliament. Gather round, children, and take a good look. This is the thing we call failure.

Just FYI

3:44 PM PT: Just some more on the IMF's completely reversal on austerity. Having urged it on the UK and others in 2009, they have now completely changed their minds

IMF Officials: We Were Wrong About Austerity

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

paradox, DeminNewJ, northsylvania, melo, askew, Trendar, Superribbie, madmsf, Shockwave, cotterperson, eeff, rubyr, Creosote, bronte17, litho, lippythelion69, sja, whenwego, Loquatrix, boadicea, Aquarius40, denig, larryrant, ceebs, Nate Roberts, Cedwyn, sviscusi, virginislandsguy, Lawrence, NYFM, liberte, grrr, walkshills, outragedinSF, Sembtex, Curt Matlock, tomjones, Emmy, rmx2630, Sybil Liberty, vcmvo2, radarlady, sc kitty, kefauver, basquebob, Dobber, eru, Inland, skyounkin, Sandino, kaliope, Savvy813, coolbreeze, Pluto, peacestpete, Jim P, martini, poco, WB Reeves, golem, edwardssl, HoundDog, AoT, sailmaker, philipmerrill, paul2port, middleagedhousewife, MBNYC, BlueMississippi, blueintheface, sea note, Aaa T Tudeattack, old wobbly, phonegery, Noor B, asilomar, donnamarie, Habitat Vic, verso2, Dartagnan, offgrid, gloriana, wildweasels, Matt Z, bobswern, gchaucer2, uciguy30, Timmethy, leonard145b, TomP, cville townie, jwinIL14, cynndara, aztecraingod, Argyrios, also mom of 5, OleHippieChick, elwior, VL Baker, tofumagoo, RandomNonviolence, TokenLiberal, Kathy S, Gemina13, Notreadytobenice, sewaneepat, Diogenes2008, jlms qkw, statsone, humanunit, maggiejean, kat68, Denise Oliver Velez, vadasz, Little Flower, mahakali overdrive, Railfan, Just Bob, chambord, awcomeon, estreya, gramofsam1, piers, boriquasi, sunny skies, elginblt, ericlewis0, soaglow, indubitably, Onomastic, sostos, Teiresias70, boomerchick, marleycat, badscience, tardis10, worldlotus, bluedust, poliwrangler, VTCC73, ratcityreprobate, SoCalSal, jadt65, Mentatmark, MichaelNY, AnnetteK, absdoggy, anodnhajo, StonyB, Siri, We Won, Jakkalbessie, ahumbleopinion, aznavy, doroma, jennyp, oldpotsmuggler, arizonablue, Kayjay, Robynhood too, WheninRome, GoGoGoEverton, Chaddiwicker, hillbrook green, onceasgt, remembrance, Icicle68, duhban, ConfusedSkyes, northcountry21st, RUNDOWN, Paradigm Change

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site