On the coalition’s economic record

A useful article by Professor Simon Wren-Lewis identifies four key misrepresentations of the UK government’s economic record. They are that

• government budgets can be understood as if they were household budgets, treating the ‘deficit’ as crucial
• the problems the coalition was dealing with were caused by the previous Labour government rather than the international financial crisis
• they have stuck to a long-term economic plan (in fact there was a major change in the direction of economic policy in 2012) , and
• the policy of austerity has been vindicated by subsequent growth.

If anything, his criticism is restrained.  Along with the misrepresentations Wren-Lewis identifies, there are others:

• the assertion (explicit in the 2011 Budget) that unsustainable private and public sector debt implied a need to rebalance the economy in favour of the private sector – simply a non-sequitur
• the claim that the deficit was attributable to benefits being out of control, and particularly benefits for people of working age – this is false in every particular –  and
• the claim that the UK has had particular economic success, when on figures I’ve previously reported the UK has had one of the weakest recoveries in the developed world since the crash.  (Estimates for later years from the IMF seem to show that the UK has more or less got back to where it was in 2008, but other large economies have done far better. )

Wren-Lewis writes: “a government with this woeful record should not be campaigning on economic competence.”

Further note, 29th April:  the economic case is put more strongly still by Paul Krugman in a lengthy article for the Guardian.  “The economics of austerity are no different in Britain from what they are in the rest of the advanced world. Harsh austerity in depressed economies isn’t necessary, and does major damage when it is imposed. That was true of Britain five years ago – and it’s still true today.”