Daily commentary: On Austerity and Britain’s double dip

Last January I called the contrast between the US and the UK "the best real-time economic experiment we can have on what does and doesn’t happen as a result of government spending." My point was that the two economies have had similar trajectories and have similar economic models. Watching how Britain using austerity compares with the US using more stimulus would be instructive.

I have said this many times. But a cut in the public sector when the private sector is indebted and needs to net save will produce a similar cut in the private sector. There's nothing wrong with that to the degree debts are too high, but this fact needs to be recognised. The fact is austerity does not promote growth. It’s one thing to say you are uncomfortable about high levels of government deficit sp...

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