Here in Britain we hear a lot about austerity. We hear that without it we would be where Greece and the other PIG nations are. I.e. facing spiraling interest rates and the very real possibility of defaulting on our national debt.
What is austerity?
Austerity is all about reigning in profligate spending. As it applies to governments, austerity is a policy, or collection of policies, aimed at reducing spending, cutting the budget deficit (i.e. the amount by which our annual expenditure exceeds our annual income), and ultimately reducing public debt.
Austerity in Britain is a myth
Given that the Chancellor, George Osborne, has repeatedly announced his commitment to austerity you could be forgiven for thinking that the amount the British government spends each year has been falling. It hasn’t.
The truth is government spending continues to increase. The UK government will spend £731 billion this financial year (fiscal year 2013), which is more than the £713 billion it spent in the last financial year, and the £691 billion it spent in 2011, and the £669 billion it spent in 2010.
The reality is that any cuts that have been made have been more than offset by increases in public spending elsewhere.