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.”
62 Responses to “FT pulls apart austerity economics”
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.
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.