Osborne claims global opinion is on his side. How does he explain this chart?
George Osborne claims that his deficit reduction plans are firmly in the international mainstream and anyone opposing them is ‘isolated’.
At the end of last month he wrote:
“The pace of the government's plan is backed by, among others, the G20, OECD, IMF and European commission – and at home, the CBI, IFS and two of the three main political parties. That doesn't look like an ideological line-up to me. Quite the reverse: it is close to a domestic and international consensus.”
To listen to the Chancellor one would assume that every other major economy is about to engage in cuts much like his own.
However this is far from the case, as the chart below demonstrates.
It shows the ‘planned discretionary change in fiscal policy’ for each of the major economies in 2009, 2010 and 2011. This is a measure of planned changes in taxes and government spending, measured as a percentage of national income (GDP).
Stimulus (spending increases and tax cuts) are shown as a positive, whilst tightening (spending cuts and tax rises) are shown as a negative.
The huge cuts starting in April, coupled with January’s VAT rise, are shown by the large negative for the UK in 2011. This is in sharp contrast to France, Germany, the US, Japan and China.
Contrary to his claims, George Osborne is well outside the international mainstream.
Duncan Weldon is senior policy officer at the TUC and blogs at Touchstone.
- Posted by: Duncan Weldon at 3:39pm on 17 March 2011
- Filed under: Not yet assigned
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