The Economist: austerity in 2010 "threatened recovery"

The coalition against austerity is overwhelming.

It feels as though a rubicon has been somewhat crossed: it is now, undoubtedly, mainstream opinion that fiscal consolidation – austerity, to you or me – in the immediate aftermath of the greatest financial crisis in 80 years was a terrible idea.

The Economist's Free Exchange column was never particularly supportive of austerity, occasionally going against the grain of the magazine's main editorial line to do so. But this week is a particularly strong attack on the idea.

In the print column, Ryan Avent focuses on the IMF's declaration that, in times of crisis, the fiscal multiplier could be several times higher than previously thought, and takes a look at wider research in the area:

What that means is that austerity may hurt much more at some times than others. In a 2010 paper Alan Auerbach and Yuriy Gorodnichenko of the University of California, Berkeley argued that the fiscal multiplier may be negative during booms, meaning that spending cuts actually raise growth. In recessions, by contrast, it could be as high as 2.5. A study by Lawrence Christiano, Martin Eichenbaum and Sergio Rebelo of Northwestern University suggested that although the multiplier may hover at around 1 normally, it could rise to more than 3 when interest rates fall to near zero, leaving the central bank with less room to act.

We called the IMF's realisation that it had severely underestimated the multiplier the most important 68 words in its world economic outlook, and it appears Avent agrees.

In the blog which accompanies the column, he doubles down on the claimtwitter):

Policymakers suffered from a striking lack of perspective in opting to pursue broad austerity beginning in 2010. It was clear at the time that some economies needed to begin cutting debts immediately and that lots of economies would need to bring debt down eventually. But a look at global conditions should have indicated that the normal cushions against fiscal cuts were weaker than normal or absent. And so the decision by countries not facing immediate market pressure to start cutting alongside those that were seriously undermined the consolidation efforts of economies in truly dire straits and threatened recovery.

Avent has much more to say, particularly on the failure of central banks to play their role correctly, and both columns are well worth reading in full.

It's always hard to argue about what ought to have happened. Politically, everyone will point out that it holds little weight: no party can win an election based on the claim that they would have been better if they had won the last one; instead, they have to present forward-looking visions, and explain why the country will be better in five years time under them.

And economically, whether or not austerity was right is now meaningless; it happened, and failed, but the circumstances are changing daily. We are (far too slowly) climbing out of depression, and at some point the arguments for fiscal consolidation will get stronger, and a new discussion will need to be had.

Nonetheless, it is worth repeating: George Osborne was wrong, emphatically, obviously and inarguably. His decisions hurt the economy and the nation entirely unnecessarily, and he refused every possible opportunity to ameliorate that damage. Plan A isn't just failing, it has failed. Yet there has been no contrition, no apology, and not even a hint of understanding. All there is is a lesson for future Chancellors: Don't Do This.

Sad Osborne is sad, but not about austerity. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.