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Austerity in Britain

Written By: - Date published: 10:59 am, July 26th, 2012 - 45 comments
Categories: economy, national, uk politics - Tags:

In Britain the Tory government’s austerity measures are working so well that they have created the worst double-dip recession in 50 years:

Shock 0.7% fall in UK GDP deepens double-dip recession

Britain’s economic output collapsed by 0.7% in the second quarter of 2012 as the country’s double-dip recession extended into a third quarter. …

Analysts in the City had expected a 0.2% drop in gross domestic product in the three months to June and were stunned by the scale of the fall in activity. The decline followed the 0.3% fall in the first three months of 2012 and a 0.4% decline in the final quarter of 2011. …

The news will come as a fresh blow to the chancellor, George Osborne, whose deficit reduction plans have been thrown off course by the poor performance of the economy. Output has declined in five of the last seven quarters.

Osborne said: … “We’re dealing with our debts at home and the debt crisis abroad. We’ve made progress over the last two years in cutting the deficit by 25% and businesses have created over 800,000 new jobs. “But given what’s happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that’s exactly what we’re doing.”

Doesn’t it all sound very – familiar? A government with no plan except cutting spending is holding the economy back. The only thing that’s growing is the volume of the rhetoric, right down to the “relentless focus on blah blah blah”.

In NZ we technically avoided a double dip recession. Just. But we’re still stuck in the doldrums. The theory of “expansionary austerity” is nonsense. Government austerity has caused nothing but damage in Britain, and (lesser) austerity is causing nothing but (lesser) damage here. No doubt the economy will limp it’s way back to growth some time. No doubt the Nats, if still in power, will claim credit when it does. But the truth is that any recovery will be in spite of the Nats, not because of them.

45 comments on “Austerity in Britain ”

  1. sweetd 1

    Austerity hasn’t started in Britian. They are still spending as much as before.

    • Caniculitis 1.1

      Yup, including 9.5 billion sterling (plus the rest) building new railway lines for the private railway companies to run their trains on.

      Oh, but they are cutting the subsidy for private companies to build wind-farms by 10%.

      • Colonial Viper 1.1.1

        I guess you brainiacs don’t count over 150,000 local council job losses as being public sector “austerity”

        http://www.guardian.co.uk/society/patrick-butler-cuts-blog/2011/feb/02/council-job-cuts-total-hits-150000

        You guys are deluded.

        • sweetd 1.1.1.1

          Which part of they are still spending as much as before don’t you get? Britian has not begin being austere.

          • Colonial Viper 1.1.1.1.1

            Who cares what the financials say?

            Austerity has already hit ordinary working people hard. Like those unemployment numbers you decided were irrelevant.

            You can say that real austerity hasn’t hit yet, from a budgetary standpoint. But for millions it already has in their day to day lives. Maybe they are not the people who matter to you though?

            • Rusty Shackleford 1.1.1.1.1.1

              Ha! Classic CV! No need to actually engage with what the person is saying, or bother with facts or anything. Why would you when it’s so much easier and fun to screech “OOOOHHHHH won’t somebody think of the CHILDREN!!!!!” at the top of your lungs.

              • McFlock

                Well, somebody has to think of the children. Right wing governments sure as shit don’t.

                • Rusty Shackleford

                  I was speaking figuratively.

                  • McFlock

                    No, really? 
                    I was merely pointing out that the oft-derided “won’t somebody think of the children” outburst can be reasonably used, on occasion. For example many of the Tory welfare policies, here and in the UK, do indeed hurt children. Similarly, the harm that rorting tory parasites cause the working classes needs to be pointed out when tories try to imply that there’s no ‘real’ austerity or minimise suffering. 
                           
                    “Austerity”, like damned near every other tory policy, is simply the process of stealing from the poor to give to the rich. Total expenditure is irrelevant – the question is “on what and for whom does the government spend money?” 

                  • Colonial Viper

                    Treasury beancounters forecast balanced books while standing on the shoulders of a drowning populace.

                    (Actually they don’t, the entire western world is going under).

              • Colonial Viper

                Rusty:

                Ha! Classic CV! No need to actually engage with what the person is saying, or bother with facts or anything.

                Like I said, you’re ignoring the most important facts: the people on the ground. Of course, you don’t consider them important. Which is also what I said.

                BTW talking to people who work for some of the local multi-multi-millionaires: austerity is really affecting their wealthy clients too. Who are putting off buying new holiday baches, delaying new business projects by 6 months, doing some sectors of their world trip in business class instead of all in first class.

                The sacrifice is horrendous, I’m sure you will admit.

                • Rusty Shackleford

                  Fine whatever. I’m not going to get into a debate about who has the best intentions. Because intentions don’t mean shit if you aren’t getting results.

                  Just don’t claim that the British economy is in a recession because of govt spending cuts. The British govt didn’t cut spending.

                  • Colonial Viper

                    You’re such an asshole.

                    How can 150,000 public sector job cuts not affect the Main St economy? How can real spending cuts on elderly and the disabled not affect the Main St economy?

                    How can you not get that replacing a dollar of spend into local communities with a dollar of spend on the rich materially changes the Main St economy.

                    Fuck you and the uneconomic donkey you rode in on mate.

                    • Rusty Shackleford

                      “How can 150,000 public sector job cuts not affect the Main St economy?”
                      Where did I ever say it wouldn’t? If you cut spending out of the economy, you are going to take an instant hit, but those jobs don’t actually produce anything. They are basically a black hole. The money for those jobs had to first come out of the productive economy. If you put that money back into the productive economy, you get output. Putting it into the public sector gets you the dead weight loss from taxation.

                      “How can you not get that replacing a dollar of spend into local communities with a dollar of spend on the rich materially changes the Main St economy.”
                      This is a strawman. I wouldn’t forcefully take money from one person and give it to another in any case. If I was forced to make a choice I would give it to the poor, but if it were my choice I wouldn’t take forcefully take money off anyone to give to another. I give money away when I’m asked all the time.

                    • Draco T Bastard

                      Putting it into the public sector gets you the dead weight loss from taxation.

                      Taxation isn’t a dead weight loss – it’s payment for services rendered. Vital services in fact. The dead weight loss is profit. More profit, more dead weight loss and the eventual collapse of the economic system – exactly as we’ve just seen with the GFC.

                      This is a strawman.

                      No it wasn’t. Everything you said after that was though.

                    • Rusty Shackleford

                      Go to a desert island, set up a ton of “services” and watch the people come flocking, happily willing to pay for “services rendered”.

                      It doesn’t work that way. In order to have taxes you have to have a productive sector of the economy. When you tax that production some value is lost that won’t be gained by anyone.

                    • Colonial Viper

                      “How can 150,000 public sector job cuts not affect the Main St economy?”
                      Where did I ever say it wouldn’t? If you cut spending out of the economy, you are going to take an instant hit, but those jobs don’t actually produce anything. They are basically a black hole.

                      Yeah, because caring for the elderly, teaching the young, maintaining our parks and natural environment are unproductive ‘black hole’ jobs.

                      Well fuck you. Because the real unproductive assholes in this economy, the ones you spend 1/100 your effort on compared to targetting ordinary people, are the rentier capitalists.

                    • Rusty Shackleford

                      eerrrmmm, most of those jobs are done by private contractors. Or could easily be done by the private economy.

                    • Colonial Viper

                      Please explain how the same work maintaining park grounds suddenly transforms from being an unproductive black hole in the economy, to suddenly being productive work – just because a similarly qualified private contractor is doing it instead of a similarly qualified council worker?

                      Fuck you’re dumb.

                    • McFlock

                      Go to a desert island, set up a ton of “services” and watch the people come flocking, happily willing to pay for “services rendered”.  

                      But we already did that – not a desert island, it’s called “New Zealand”. Growing population for 150 years. Generally more so under left wing governments, wars notwithstanding.
                         
                      The only downside with it is the tendency for rightwing dickeads to turn up and bitch. 

                    • Draco T Bastard

                      In order to have taxes you have to have a productive sector of the economy.

                      Yes, you’ve said that before. It was wrong then to.

                      The first thing you need is resources including human capital. That means the first thing you need is a community that needs administering. The administrators are paid from taxing everyone else because it’s the cheapest and easiest way of doing so.

                      Early on in a society profit is actually a tax for services rendered as the capitalists did the administration (the same reason we have government) but later the capitalists get the idea of charging interest and paying others to do the administration. At that point, profit is pure dead weight loss* and that’s the point that our society has got to.

                      * This is proved by the actions of Telecom. Paid billions of dollars over 20 years of which ~$15b was pulled out in profit and now we’re paying them even more to do what the original billions was for and wasn’t done due to the massive profits the private owners had pulled out. Work that would have been done if Telecom had remained state owned.

                  • McFlock

                    More semantic bullshit.
                       
                    The common use of the term is to cut deficits, not spending per se. So they cut public services while increasing user charges. 
                        
                    But based on the last year or two, there does seem to have been a slight decrease in spending in the UK, so frankly toryboys are once again full of crap.

        • Lostinsuburbia 1.1.1.2

          Yep and the wage freeze on local council workers that’s been going for several years now. Until March last year I was working for a Council in East London. The budget cuts were very heavy and the downturn in the economy and Govt spending was evident in the local communities too. The wheels are truly coming off British society. Coming back here was the best thing i could do.

    • mike e 1.2

      Sweety they are borrowing more because of cuts Austerity less money in circulation means less taxes much less in fact!
      So much so that they had predicted a budget surplus by 2013 but instead the Tories have borrowed 20% more than last year.
      So there is your Austerity theory RWNJ’s!
      It does not work.
      Never has.

  2. Zaphod Beeblebrox 2

    Its not actually austerity that conservative governments like to indulge in. More like transferring the welfare system to benefit the corporate system instead of those that actually need it (and can spend it in a way that benefits the economy). Government deficits are actually increasing in Britain and NZ.

    Giving tax cuts to upper income earners and building billion dollar roads hardly qualifies as austerity.

    • prism 2.1

      ZB And spending zoomed up in the USA after Ronald Reagan who was going to get government cheaper and welfare tamed

  3. ghostwhowalksnz 3

    The British economy has fallen further than the French since the start of the GFC.

    • Colonial Viper 3.1

      Ah, that’s only an issue of timing, right? 🙂

      UK shouldn’t be too reassured, 50% youth unemployment amongst blacks, highest rates of women unemployed in the last 25 years.

      Plus a big surprise negative drop in GDP this quarter, one that no one saw coming.

    • rosy 3.2

      Worst performing economy in the G8 – bar Italy, and the economy is smaller than when the Conservatives took office.

  4. Draco T Bastard 4

    The theory of “expansionary austerity” is nonsense.

    So is the infinite growth meme. Actually, the economic system we use is bollocks. Continuing to tinker with it in the hope that it will suddenly start working after it’s failed for centuries is delusional.

    • aerobubble 4.1

      It become bollocks when Thatcher decided to introduce Monetarism. Government
      intervention into the market. Opening up leveraging, a social fiscal revolution, that
      debased, has debased, all valuations within the world economy since.

      The closer you are to a banker the better able you are to leverage your wealth at
      a higher rate, this has nothing to do with the natural invisible hand of markets,
      its a giant short circuit of the whole economic reward system.

      If you have a mate in banking, you can buy out a great idea from someone, and
      create your own niche global monopoly, it has nothing to do with your intrinsic
      brilliance or worth to the ‘greater growth’.

      Now big money owns everything, the factories, the boardrooms, the presses,
      they are the problem now.

      But wait its worse. There are three disasters unfolding. The fiscal is merely the
      least worse, and its really bad. The primary is the resource limits, secondary
      is climate change, and only lastly is our maligning snob global class.

    • Colonial Viper 4.2

      Please forward on to Labour.

  5. JonL 5

    “But the truth is that any recovery will be in spite of the Nats, not because of them.”

    Since when has it been any different………

    • mike e 5.1

      BBc world has been infiltrated by right wing economists towing the TORY party line.

  6. Rusty Shackleford 6

    By how much have the UK govt cut total spending?

    • Colonial Viper 6.1

      They’ve cut spending on poor people a shitload. But that doesn’t count to you right?

      • Rusty Shackleford 6.1.1

        I wouldn’t forcefully take money off one person and give it to another in any case. Whether they be rich or poor. So, no. It doesn’t count to me. But, I wouldn’t give money to rich people, either. So, at least I’m consistent.

        • McFlock 6.1.1.1

          I wouldn’t forcefully take money off one person and give it to another in any case.
           

          But you will gladly receive “stolen” money. 
          Not all that consistent. 

          • Rusty Shackleford 6.1.1.1.1

            Haha, I’ve gladly copped to being a hypocrite on more than one occasion in the past. This doesn’t make me wrong on anything I’ve said here, though.

            • Colonial Viper 6.1.1.1.1.1

              It surely does.

              • Rusty Shackleford

                In what way?

                • Colonial Viper

                  If you have been inconsistent multiple times, how can you claim to be usually correct?

                • McFlock

                  1) You just said you were consistent. You’re not, you’re a hypocrite
                  2) We have the assurance of an admitted hypocrite that he wouldn’t take money off people or give money to rich people. Although he’s perfectly happy to take it from the alleged thieves. How reliable is that, would you say?
                          
                  So the weak defence of some sort of “consistency” in your moral framework that you used to defend your utter disregard for the welfare of others falls down because you’re inconsistent and untrustworthy.
                     
                  Basically, people are suffering in an extreme way, and you don’t care. Not out of some moral code, not because you believe theft is wrong. Simply because you lack that little switch that is possessed by most people on the planet: that we should care about the hardship of others. That we should empathise with their pain. And that we should try to help them if we can.
                       
                  The fact that someone without empathy works for Work&Income describes our times and customs perfectly.  
                   

          • aerobubble 6.1.1.1.2

            When the rich pay little or no tax, but get huge representational influence, they are effectively being subsidies by the rest of us, that do pay our fair share. That’s an unfair advantage in the market place, that new much more innovative entrants can’t match (often brought out by the new aristocracy of wealth). The adage applies, no representation without taxation, no taxation without representation.

            The brilliant point is that if Romney wins the presidency, then the corruption of such a basic tenet of western civilization, will inspire many to get off their backsides and demand fairness.

    • DS 6.2

      You mean minus all that foreign aid and all those EU handouts? Still not sure but it must be a lot, I’ll just get some drunk to run the economy.

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