FT pulls apart austerity economics

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

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.

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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62 Responses to “FT pulls apart austerity economics”

  1. Alan Rose

    Just shows what a ‘con’ austerity is and most people seem to have fallen for it. The current crisis was mainly caused by the banking sector but ordinary people are being made to pay for it.

  2. LB

    Iceland is missing. Wonder why?

  3. LB


    Why has the state left the state pensions off the books? What about all the other debts, off balance sheet?

    Why’s the state spending 150 bn a year?

    Keysian stimulus of 30% of taxation for 4 years. Borrow and spend, just as Kenyes says is the solution, and what happens? Boom and the economy fixed? Nope.

    The reason is the mess is caused by borrow and spend, and the fix isn’t going to be the cause.

    People have been conned and deluded that the nice friendly state is there for them, when in practice its robbing them blind.

  4. cynicalhighlander

    Iceland is missing. Wonder why?

    Maybe because they jailed their bankers.

  5. Superwhit

    I cannot understand how throwing people on the dole can support growth in the economy. People who don’t earn money can’t spend any!

  6. LB

    Did they?

    They have growth. Why omit them?

    Ah yes, it was they cleaned up their banks by liquidating them. They didn’t socialise the losses like Gordon and his disastrous policies.

    End result, they aren’t paying the price.

    Another point, why have the left off the effect of tax rises. Put tax rises up (35% in the UK) against growth and its an even more stark comparison.

    Put tax levels against growth, and its again obvious. Low tax = high growth.

    All goes back to the debts. 5,300 bn a least omitted from the accounts. Hence the government is taxing everything. Result, consumers aren’t spending.

    Government spend however is up up and away. There are no cuts in spending.

  7. henrytinsley

    Who is Keys or Kenyes?

  8. Bananatwix

    “Government spend however is up up and away. There are no cuts in spending.”

    That’s why where I work has had its funding slashed then… there ARE cuts, they’re just silly cuts though as when they cut them they seem to forget they’ll have to spend somewhere else instead after cutting that… (Example being, cutting jobs = more money to job seekers allowance, housing, ect).

  9. LB

    director of the British Eugenics Society as well.

    Like Beveridge. He was all for bumping off people who were expensive such as the disabled.

    What is it with the left and a desire to kill people? Nazis, communists in Russia, Pol Pot, Mao, …

  10. LB

    However, over all spending is rising by billions and billions.

    money to job seekers allowance, housing


    So take the change in spending
    So look at the change in unemployment.
    Divide one by the other.

    If you are right, then the unemployed are being paid unbelievable sums

  11. henrytinsley

    The Nazis weren’t left wing. They killed and imprisoned lefties and trade unionists.

  12. henrytinsley

    Iceland has a left wing government. Last year their economy grew nicely, unemployment is down as if their deficit. And I don’t think they murder their citizens.

  13. Jon Johannsson

    Iceland’s most likely omitted because it’s not part of the EU, and it’s economy is tiny compared to those on the graphs. Yes Iceland liquidized several of the banks, and in some instances jail bankers and seize their assets, especially those trying to escape the country with everything they had.

    Why is it with every discussion Nazi’s inevitably come up? and who in their right mind associates them with centre-left economics?

  14. henrytinsley

    Conservative leaders Arthur Balfour and Neville Chamberlain were members of the Eugenics Society too. Beveridge was a Liberal (and briefly a Liberal MP).

  15. LB

    Clue is in the name. National SOCIALISTS.

  16. LB


    Iceland’s economy contracted in the fourth quarter as the government spent less and imports grew, offsetting gains in investment and exports.


    Hmmm, spending less, produces growth. Now in the UK we have government spending more and more, and taxing the hell out of everyone.

    Now, why don’t we try the Iceland approach?

  17. LB

    Well, because its costs much less than the cost of employing them on make work schemes.

    That means you don’t tax other people. Then they spend and invest more, and you get growth. That growth means more jobs for those that used to work for the state.

    Very simple. You just need to make sure you include everyone and not look just at those on make work schemes. Include the impacts like spending people’s pensions so they won’t get one. Include taxes which mean they don’t spend, ….

    ie. You’ve got a very selective view, so its not surprising you come to the wrong conclusion.

  18. LB

    Shows you why the state is the enemy of people.

    The state is just a means of screwing ordinary people. Eg. The welfare state’s consequence is that people won’t get pensions, because they’ve spent all the money.

    ONS put the debts at 5,300 bn for pensions. How do you pay that on 550 tax revenues, and 700 bn spending?

    That pension by the way is 20% of what you would have received from the FTSE.

  19. Stephen Wigmore

    Either that or countries with collapsing economies need to cut more.

    You really think Greece’s economy collapsed because it cut? Not that it was forced to cut because its economy collapsed?

    You’re a joke.

  20. LB

    The clue is in the name. National SOCIALISTS. Their economical policy was left of center. Combined with them being murdering scum like a lot of other socialists.

  21. LB

    It collapsed because it was running a fraud. Debts off the books.

    Same will happen here for the identical reasons. 5,300 bn of pensions debts off the books.

  22. LB

    Alberto Alesina & Silvia Ardagna,Large changes in fiscal policy: taxes versus spending, inTax
    Policy and the Economy, Vol. 24 (Univ. of Chicago Press, 2010).OECD countries (fiscal stimuli and fiscal adjustments, 1970 to 2007)

    Fiscal stimuli based upon tax cuts more likely to increase growth than those based upon spending increases. Fiscal consolidations based upon spending cuts and no tax increases are more likely to succeed at reducing deficits and debt and less likely to create recessions.


    So what’s the Condems doing and Labour advocating?

    1. Higher taxes
    2. More spending.

    Exactly the wrong policy, which is why its going Pete Tong.

  23. George Winstanley

    Gwhizz Perhaps many of you never think to look at what is happening in the E.U. Parliment.s ..Barroso hits out at the biggest borrowers in the E.U. by far Guess who? This government of course, Nigel Farage like him or hate him you should also listen to how he speaks about all our E.U. problems.He talks straight and to the point about our country and the E.U.

  24. anon

    “Why is it with every discussion Nazi’s inevitably come up?”
    Welcome to the internet…

  25. henrytinsley

    Don’t be so silly. The Japanese Liberal Party are not Liberal just because of their name. Hitler became chancellor in 1933 in coalition with conservatives. He and his mates went around murdering left-wingers (and Jews), not conservatives. As did Mussolini and Franco.

    Anyone who thinks Hitler was a lefty is an idiot.

  26. LB

    National “Socialist”

    Clues in the name.

    So put some numbers.

    Mussolini? Moot, I can argue either way. Franco – Tend to agree, right winger.

    So how many did they kill?

    National socialists? 7 million

    Stalin – Communist so that’s left wing socialism. 20 million

    Mao – 50 million

    Pol Pot, …

    If you want to play top trumps as to whether its the left that kills or the right, its the left that tops the list.


    Small signs here. Liverpool Care Pathway where socialized medicine is bumping people off for cost reasons, without telling the patients or their families.

  27. henrytinsley

    You didn’t answer my point.

    Hitler would have bumped you off if you’d accused him of being a left winger. He hated lefties, endlessly ranted about them, and had them killed.

    I don’t know where you get your figures from. Some nutty website? Many more that 7 million were killed in World War 2, and no-one really knows how many millions Stalin had murdered. And so on.

    Why you can’t accept that both far left and far right have behaved vilely – and still do? When it comes to mass murder, it’s extremism that the problem, not left or right.

  28. henrytinsley

    So your point about lefties and eugenics is rubbish, so you change the subject.

  29. LB

    Yes, but there is a difference of scale. Orders of magnitude.

    National socialsts (hint is in the name) killed lots of people. They killed people, Jews, as a scapegoat. They killed anyone who opposed them. As did Stalin. Still Socialists.

    7 million were killed in the concentration camps. Denying it?

    So how many did the national socialist kill compared to Franco? As one example.

    What about Mao?

    What about Stalin?

    Whose top of the non-Socialist killers then?

  30. henrytinsley

    So it appears you don’t actually know the figures after all.

    And you are unable to refute my argument that Hitler was a right winger except by repeating the name of his party. Completely irrelevant.

  31. LB

    I don’t care what left/right label you want to put on him.

    He was a socialist. He viewed himself as a socialist. Lots of his policies are no different from socialist parties in the UK. e.g Beverige and Eugenics.

  32. henrytinsley

    You obviously know nothing whatsoever about history, and are completely careless with facts. Over and out.

  33. LB

    Not at all. The problem you face is that Hitler was a racist murdering socialist.

    You don’t want to be associated with those policies, bar the socialism.

    So what you’re doing is a bit of Stalinist revisionism. If we define Hitler are right wing, we define the Tories or anyone we don’t like as right wing, and then by association group the two together.

    The problem is that history and the facts are against you.

    Hence your problem in coming up with any numbers in your game of top trumps for killing, when it comes to the right wing Killers. Franco killed quite a few, but the Socialists killed more than Franco in single days compared to a life time for Franco.

  34. Guy Halsall

    Who is this idiot LB? Hitler a socialist? This is the Right’s latest myth. OK he had the word socialist in his party’s name. He also had the word National and Democratic in NSDP’s name. He tortured and imprisoned unionists, socialists, communists and had the support of conservatives. Because he believed in a strong state does not make him a socialist. Left-wingers believe in a strong state as the best insurance of the basic freedoms of the majority, but they also believe strong social institutions to moderate the state (Trades Unions etc). None of this has anything in common with Nazism, which believed in a Nation that was bound in a sort of feudo-vassalic relationship (hence their emphasis on oaths) to their war-leader, the Führer: nothing socialist about that. If the Nazis were socialists how come the BNP and their ilk, who hate socialists, are always denying the holocaust and giving Hitler salutes? Your comments are no more than mindless trolling. You clearly know even less about history than you know about economics. Who pays you?

  35. Newsbot9

    Except he introduced the NHS. People can change for the better, you might try it one day.

    Keep on trying to palm off your violent killers onto the left, so you can excuse your violent thugs today.

  36. gms

    famous economist

  37. Newsbot9

    Keep on pretending that your Corporatists are “the state”, while you attack pensions, keep talking up non-Keynsian spending as somehow being Keysian in your imagination, and keep calling for taxing the poor and giving them nothing.

    And you’re a self-confessed foreign criminal too.

  38. Newsbot9

    Yes, the clue is the fact it stood for anti-Communism, and Hitler regretted the name. But that’s history, you don’t believe in it unless you’re using it to excuse your thugs.

  39. Newsbot9

    Yes, it’s SO terrible that that schools, hospitals, etc. exist. You simply oppose paying pensions, which are paid out of current revenue, because your corporate welfare billions might suffer.

    And the pension is “20%” of what you’d get if there was nothing else it was spent on, if everyone could invest in the FTSE, if there were zero charges, etc.

    A typical scam of yours.
    And by making you pay tax.

  40. Newsbot9

    When you steal from everyone else, and have a lot of natural resources, it’s amazing what happens.

  41. Newsbot9

    The reason people are not spending is because they are looking at pay cuts because of your economic death-cycle policies caused by unmitigated fiscal contraction (austerity).

    It’s obvious that your simple-minded prescription fails the second Germany and the Nordics are considered, try again with a working plan.

    You’re not only an austerity denier, you’re a recession denier. Your wealth is soaring, screw the 99%!

  42. Newsbot9

    Yes, of course you want to slash already very low benefits so you can kill ever-more people.

  43. Newsbot9

    And have made virtually every deposit scheme in the EU worthless. Don’t forget that. Tens of billions of damage are being done right now as a result.

  44. Newsbot9

    Yes, the clue that you’re a Neo-Nazi and denier. You of course try to pass off your murdering onto the left.

  45. Newsbot9

    Stormfront, probably,

    He won’t accept any responsibility for anything.

  46. Newsbot9

    Yes, I’m sure you want people to die slowly in pain to maximise your profits at private hospitals. Keep trying to pass off YOUR murdering onto “socialists”.

    Numbers? Hundreds of millions in the third world.

  47. Newsbot9

    Yes, you’ve killed hundreds of millions in the third world with your Capitalism.

  48. Newsbot9

    Except you do. You’re rabidly spouting Stormfront propaganda.

    You make nonsense comparisons to justify your violence.

  49. Newsbot9

    He’s a well known troll and shill.

    But no – Not all left wingers are stateists. At all. Mutualists like myself, while of the left, are very much against a powerful centralised state.

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