Dean Baker comments on British austerity:
We have thousands of people in Washington who seem convinced that if the government would just stop spending money and lay off more employees then the private sector would respond with increased output and hiring.
While this might seem implausible on its face (what business hires people because the government has laid off school teachers or firefighters?), we no longer have to speculate about the impact of budget cuts and government layoffs, the United Kingdom is showing us.
The government elected last spring in the United Kingdom committed itself to rapidly reducing the size of its deficit. This government austerity was supposed to give a big boost to the private sector. It actually did the opposite. Growth has fallen to a near standstill. The IMF projects that the U.K. economy will grow by just 0.6 percent this year and an only slighter better 1.6 percent in 2013. This pace is not even fast enough to keep up with the growth of the U.K.’s labor market.
But as Scott Sumner and Don have pointed out, the UK appears not to have actually done anything austere. Notice that the only mention that Baker actually makes of the actual amount of austerity is a “commitment” to austerity. Is it possible they have failed or will fail to honor that commitment?
Anyone with data to the contrary that actually demonstrates UK austerity, please send it along and I will post it.