and rich supporters who want their taxes cut, and government shrunk, under the guise of austerity:
Question 1: Do you agree that the austerity policies of the coalition government have had a positive effect on aggregate economic activity (employment and GDP) in the UK?
Summary of responses
The great majority disagree or disagree strongly with the proposition. Of the 50 economists in the survey, 33 responded: two thirds disagree or strongly disagree that coalition policies have had a positive effect on aggregate economic activity. To be precise, no one strongly agrees, 15% agree, 18% neither agree nor disagree, 33% disagree and 33% strongly disagree. Ignoring those who sat on the fence, 19% agree and 81% disagree with the proposition. This ratio is unaffected by confidence weighting.
Many of the respondents begin by noting that it is far from clear what the counterfactual is and that austerity policies were significantly loosened in the second half of the term.
Nevertheless, the clear majority of our respondents disagree or strongly disagree with the proposition. Simon Wren-Lewis (Oxford) even goes so far as to ask whether ‘this is a joke’ before pointing out that by using numbers from the Office for Budget Responsibility (OBR), one can ‘derive a lowest estimate’ for the cumulative loss in activity of 5% of GDP (or £1,500 per capita) and ‘a best guess could be nearer to 10% of GDP.’ Ethan Ilzetzki (London School of Economics, LSE) strongly disagrees, noting that ‘interest rates were at historical low levels and there was no indication that the debt burden was a drag on growth.’ John Van Reenen (LSE) also strongly disagrees, although he says that austerity was correctly relaxed after 2011-12 as the ‘nascent recovery stuttered.’ He and Tony Yates (Bristol) both mention the zero lower bound on interest rates as an argument for less austerity.
http://cfmsurvey.org/surveys/importance-elections-uk-economic-activityAbout the CFM Survey
The monthly CFM survey informs the public about the views held by prominent UK-based economists on important macroeconomic and public policy questions. The survey sheds light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Osborne changed his spending plans so it would,
just, avoid dropping back to government spending levels from the 1930s (ie before the NHS existed). Now, the OBR says, it's just going to go back to 1964 levels:
Relative to the size of the economy, nominal government consumption is forecast to fall from 19.7 per cent of GDP in 2014 to 16.1 per cent of GDP by 2019. This is less of a fall than we forecast in December, but would still leave government consumption as a share of GDP equal to its level in 1964 and would be the joint lowest level in consistent National Accounts data going back to 1948. On a quarterly basis, government consumption falls to 15.9 per cent of GDP at the end of 2018. This is marginally above its previous low of 15.8 per cent, again in 1964.
http://www.newstatesman.com/politics/2015/03/were-only-cutting-spending-1964-levels-balls-mocks-tories-new-defenceMeanwhile,
the interest we pay on the public debt is fairly low - 2.91% of GDP in 2014, which is lower than any year from 1916 to 1991. The highest it got after the 2008 recession was 3.15% - the same as 1999.
Labour (and the Lib Dems) really ought to be pointing out that austerity is not needed. This is something the Greens (and SNP and PC, for those who can vote for them) are getting right:
http://www.bbc.co.uk/news/uk-politics-31761540
https://www.greenparty.org.uk/news/2014/12/15/green-party,-snp-and-plaid-cymru-austerity-has-failed.-time-for-a-new-approach-to-politics/
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