If you’re “noting things” then you should note that the UK cut spending for two years, threw itself into a double dip recession, and then decided that maybe that wasn’t the best idea and started spending again. The pols spun it another way because after all, how could they say “Wow, did we screw this up!”
It did nothing of the sorts.
- UK Government spending has continued to rise every year since the great recession hit. Austerity has been all talk - in reality it meant slowing down the spending increases - not reducing spending. UK like most other countries have no idea what austerity or living within your means really is.
- There was no double dip recession - when the revised numbers were issued it confirmed the double dip never happened.
Get it right if you are going to swing big statements around like that.
Ant
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Greece also has Ouzo and feta cheese. Greece’s amjor export is workers for US diners
In case you want the details…
Those are nice charts. But what I meant was “actual spending.” Those charts are not inflation adjusted, and they include interest on the national debt (more below), both of which are significant factors, and not taken into consideration in a mere charts of “spending without context.”
Stimulus spending is supposed to, you know, stimulate, by putting money in motion inside the economy. Dollars which are worth less are not worthless, but they are not worth as much as the dollars before, see? $1 million this year is not the same spending as $1 million last year, even though it is nominally the same.
The money spent on “interest”, which is considerable in the UK, largely winds up in the pockets of people in the UK. Since those tend to be already wealthy, it does not “stimulate” the economy (I have the same complaint with the US version, in which tax reductions for upper income people end up in savings accounts, not in Walmart cash registers. Likewise QE, but that’s another whole thread.)
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Goofy - your story does not add up so either admit it or desist. You claim they cut spending which led to a double dip. Then ramped up again. They did not cut spending (nominally) but you claim well actually they did if you factor in inflation (real).
In one year inflation adjustments would have meant instead of a 1% spending increase a 1% spending decrease occurred and then continued to increase in real terms. That was in 2012 but that isn’t when the economy was growing again. There was no double dip as you claim and the period when there was claimed to be a double dip was 2011.
Your story does not hold true as you portray it.
Yes UK exercised massive QE but that is not what you were saying nor what I was correcting (and if anything QE is not an austerity policy but anti-austerity).
Ant
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When the government doesn’t spend in the first place, or cuts spending, the people who would have worked on the bridge have to cut back, so they don’t buy the new cars and refrigerators, and the workers who made the new cars did’t have as much work and cut back and don’t buy as much fruit and vegetables and milk and clothes, and the farmers who would have sold it to them cut back and don’t buy new tractors, etc, AND, the KEY POINT, the government doesn’t make as much in taxes, so the government deficit goes UP when they cut spending, not down!
The most critical reason why you don’t cut government spending DURING RECESSIONS is that monetary policy cannot compensate for such cuts.
If you cut government spending during good economic times, the Fed can compensate for the shortfall in demand by providing monetary stimulus (most likely in the form of not raising interest rates as much as it would otherwise have).
During a recession, and especially under post-credit bubble conditions, monetary policy is at its limit anyway and cannot do anything to offset the damage.
IF you want to cut government spending, it must be done during times of robust economic expansion.
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