Duncan Needham: Austerity Britain, it’s déjà vu all over again

Written by Ashwin Rattan Saturday, 26 January 2013 21:01
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Duncan Needham worked as a bond trader at JP Morgan and a fund manager at Cairn Capital before coming to Cambridge to take a PhD.  His research focuses on UK economic policy from the 1960s to the 1980s.

The last 100 years have seen several governments introduce austerity measures to try to balance the books. Duncan Needham, a Phd candidate in the Centre for Financial History, compares past and present, concluding that current public spending cuts are inhibiting the growth we need.

In May 2010, Britain’s first coalition government since the Second World War announced that its primary objective was to reduce the deficit, then running at 11 per cent as the public sector spent £156 billion more than it raised in taxes.  Six weeks later, the Chancellor, George Osborne, increased the spending cuts and tax hikes inherited from the Labour Government to £113 billion over five years, with the largest single adjustment to fall on welfare recipients.  The Chancellor aimed to balance the budget by 2016, by which time public sector debt would be declining as a percentage of Gross Domestic Product (GDP).  He also plans to reduce the public sector’s share of the economy from 48 per cent to 39.5 per cent.

While Osborne is keen to stress the unique nature of the current crisis, we have been here before – not once but several times.  


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