The macroeconomics of austerity

A new study from the thinktank the Progressive Economics Forum (PEF), published today, uses official figures to show that the total economic damage inflicted by austerity is significantly higher than previously thought, needlessly cutting more than half a trillion pounds from public expenditure.Using figures from the Office for Budget Responsibility, the paper demonstrates that governments from 2010 onwards could have maintained historic rates of growth in public spending and still have reduced Britain’s government debt burden by 2019.Austerity was not an inevitability. The financial crisis of 2008 sent the global economy into a tailspin, with capital flows collapsing and world trade grinding to a halt. Economic output across rich economies slumped dramatically. In immediate response, the G20 conference in April 2009 produced a hard-won international consensus on the need for coordinated fiscal and monetary expansion