FT pulls apart austerity economics


The Financial Times (£) has this morning produced a blinding set of graphs which highlight how fiscal austerity has had a negative impacted on the GDP of various European economies.

Essentially, the greater each government’s austerity drive the larger the drop in GDP. Are you listening, Mr Osborne? The third graph (furthest to the right) is the important one (the horizontal line depicts the level of austerity from 2009-2012 and the vertical line shows the fall in GDP.

austerity graph

The coup de grace is delivered, however, by Paul Krugman of The New York Times:

“Austerity was costly for the afflicted economies: the greater the tightening between 2009 and 2012, according to the International Monetary Fund, the bigger the fall in output.”

Thus, FT journalist Martin Wolf adds, “the panic that justified the UK coalition government’s turn to a long-term programme of austerity was a mistake“.

“In the long run, the fiscal deficit must close. In the short run, the UK has the chance to push growth. It should take it. So should the US.”

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  • Newsbot9

    He talks the same anti-British propaganda all the time, yes.

  • Newsbot9

    Nope, you’re trying to collapse it for the deaths. The UK’s pension debt, which is on the books, is quite average.

  • Newsbot9

    Wow, one article versus dozens showing the opposite.

  • Mark Moore

    This only looks at the initial effect, in which case it makes sense that the more a government cuts the less the economy will grow. If you spend less, then your consumption drops – so far, so obvious.

    The case for austerity is not that it helps short term growth, it’s that it helps long term growth. It’s not difficult to borrow loads, spend it and get some phantom growth on the GDP figures. Lower debt equals more growth over the long term (at least, that’s the argument). So this doesn’t pull apart the case for austerity in the slightest. It just states what you’d expect from it.

  • http://www.facebook.com/profile.php?id=620697265 Taylor Harrison

    LB, how, possibly, rationally, empirically, quantitively, could you say that Alan’s comment that The Great Ressession was mainly caused by the banking sector is ‘bollocks.’

    Data & extrapolation only please – let’s have a scientifically sourced debate, not ‘Hitler was a leftie’ style gibberish.

  • Jack Johnson

    This LFF blog from the the FT is demonstrating that conservative governments are shrinking
    economies via their austerity measures, What the hell is this lunatic LB talking about? He has
    as much knowledge of history and politics as a cow pat. As he will frighten sensitive good
    people it would be best for all of humanity if you send him back to his troglodyte cave. Plus he
    cannot spell Keynesian or comprehend what it means.Democracy is vital,even for idiots, but
    this prick nees to be silenced.He is taking up too much common sense space.

  • henrytinsley

    I suggest you go to a library and read up on history instead of spouting ignorant nonsense.

  • http://twitter.com/WillORNG WillORNG

    Plenty of right wingers deny it was six million let alone seven.Hitler was centrist economically centrist and an authoritarian.still you avoid the point that digging the output gap deeper is failed economics that kills poor weak vulnerable people and gives swathes of America with it’s half baked healthcare let life expectancy!

  • LB

    Plenty of reports to day that the National Socialists under Hitler killed 20 million.

    The problem you face is that under Labour the off the book debts went up by over 730 bn a year between 2005 and 2010.

    http://www.ons.gov.uk/ons/dcp171766_263808.pdf

    That’s come out of people’s pension money, and the the end result of that looting is that people will be destitute. The state can’t pay, not that it won’t pay.

    As for the NHS, 40,000 avoidable deaths a year. The US rate is bad at one death in 4,000 of population.

    The NHS is 1 in 1,500. Far far worse.

    I agree the US as a halfbaked health care. It’s not a good choice. It’s bad in practice as you say.

    But the NHS is far worse. BMJ figures for the UK. WHO for the USA.

  • frak100

    Don’t waste your time arguing with LB, he’s just a right wing troll, repeating arguments I’ve seen him use elsewhere.

  • LB

    Far from it.

    The difference is that I post evidence as to what is going on. The left and the right, choose to ignore it to the detriment of the people of this country.

    You’ve assumed that because I have a go at the left here, that must make me right wing.

    What you don’t see is how much I have a go at the right, such as the Tories on other sites.

    I’ll put that down to a lack of education and the ability to think things through, instead of jumping to conclusions.

    So back to the two core issues.

    1. What are you going to do about the 5,300 bn government debt that has been hidden of the books? Pensions.

    2. What about the 40,000 slaughtered in the NHS each year – avoidable deaths.

  • LB

    Look at the overall level of spending.

    If you are being cut, then there are lots of departments which must be booming.

    Hint, its not welfare.

    So come on, how are you going to pay the 150 bn deficit plus interest, multiplied by 4.