Fiscal Austerity: Lessons from Recent Events in the British Isles

As economic austerity threatens to sweep Europe, the highly unrealistic expectations about the benefits of government spending cuts is not appreciated by the public. It is unlikely they will result in substantial expansion; to the contrary, they are contractionary. But the strong analysis in this piece, using the British budget proposals as a key example, shows starkly that the required changes in investment, savings and other variables on the part of the private sector are utterly implausible. Slow growth, or even, recession is the likely outcome.