Britain’s Closet Keynesian

As British Chancellor of the Exchequer George Osborne, the poster child for austerity, repeatedly misses his deadlines to balance the budget, he is starting to look like a closet Keynesian. What he fails to realize is that his attempts to cut spending during a crisis are undermining his effort to reduce the deficit.

LONDON – There is a growing apprehension among Britain’s financial pundits that Chancellor of the Exchequer George Osborne is not nearly as determined to cut public spending as he pretends to be. He sets himself deadlines to balance the books, but when the date arrives, with the books still unbalanced, he simply sets another.

Consider some fiscal arithmetic. When Osborne became Chancellor in 2010, the budget deficit – spending minus revenue – was £153 billion ($239 billion), or 10.2% of GDP. He promised that by 2015 the deficit would stand at only £37 billion, or 2.1% of GDP – equivalent to balancing current spending and revenue. Instead, the deficit for 2014-2015 is expected to be £97 billion. The conclusion of Osborne’s balancing act has been postponed until the 2019-2020 budget.

Osborne talks about the need to cut spending, but his actions say otherwise. Though he vowed to reduce spending by more than £100 billion by now, he has cut less than half of that, simply extending his five-year rolling program of cuts for another few years. As a result, Osborne, the poster child for British austerity, is starting to look like a closet Keynesian.

To continue reading, please log in or enter your email address.

To read this article from our archive, please log in or register now. After entering your email, you'll have access to two free articles from our archive every month. For unlimited access to Project Syndicate, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/V6B4T8U;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.