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Austerity Politics, Then and Now

PRINCETON – Britain’s policy of fiscal consolidation, recently announced by Chancellor of the Exchequer George Osborne, sent shock waves around the world. Osborne argued that Britain was on the brink: that there was no alternative to his policy if the country was to avoid a massive crisis of confidence.

Other countries, such as Greece, needed to have a full-blown crisis in order to prompt such adjustment measures, whereas Britain was acting prudently and preemptively. If Britain, with a relatively low share of public debt to GDP (64.6%) is worried, the implication is that many other countries should be much more concerned.