What do economists really think about the austerity policies pursued by the UK and many other European states?

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30 November
11:09
November
2016

I think a reasonable majority of economists believe that austerity was overdone in Europe, and that moves to a large majority in the case of Greece.

"Theresa May is basically saying, 'Ignore everything George Osborne said. We didn’t really mean it'."

It would be unfair to say it’s unanimous, but there’s an increasing consensus that fiscal policy was too tight over the last seven or eight years – and the fact that the current UK government under Theresa May has said they’re going to ditch George Osborne’s targets shows that. Opinion on how big a mistake it was, and in which countries, varies considerably, but the view is generally that policy should have been less restrictive [raising taxes, cutting government spending] and more activist [stimulating the economy].

Now we have Trump in the USA saying he’s going to spend lots of money on infrastructure too. No one knows what Trump will actually do, but it’s significant that Republicans have been moaning for years that America should be more fiscally conservative and how Obama was spending too much, and now having finally elected a Republican president they’re saying, “Oh, we didn’t actually mean that.”

Theresa May is similar. She’s basically saying, “Ignore everything George Osborne said. We didn’t really mean it.”

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