This chart above is making the rounds today. As Brad DeLong explains, it shows recessions and recoveries in Britain over the past century, and you can see that the current recession, from 2008 to the present, is currently worse than at this point during the Great Depression. The British economy was on the rebound about 30 months out from the recession’s start, but around mid-2010 it started going sideways, and has remained in that position ever since. The new conservative Prime Minister of Britain, David Cameron, took office in May 2010 and immediately instituted his austerity regime. The chart above shows the result: an economy now in worse shape than it was during the Depression.
In less than a year, if current forecasts come true, the Cameron-Osborne Depression will not be the worst depression in Britain since the Great Depression, but the worst depression in Britain… probably ever.
That is quite an accomplishment.
As Phillip Inman of the Guardian puts it:
“The UK’s plan for recovery from the financial crisis was based on a full-throttle recovery in 2012… consumer confidence, business investment and general spending would converge to send the economy on a trajectory of above-average growth… the lack of investment will perplex ministers. They have done what the right-wing economists told them to do and moved out of the way – the theory being that public sector spending and investment was ‘crowding out’ the private sector…”
The conservative theories about starving public spending as a way to jump-start private investment have been proven completely wrong by this test case. Austerity during a fragile recovery is destroying Britain. As Brad writes, if there’s any country where this myth of expansionary austerity should have worked, it was Britain. But it’s not working at all.
Interest rates in Britain are about as low as they are here. Britain can borrow at around 2% per year. They choose not to, with disastrous results from their citizenry.
DeLong writes that junior partner Nick Clegg of the Liberal Democrats should just resign the coalition and kickstart new elections before it’s too late. I doubt that will come to pass. Instead, Cameron and Clegg will carry a “stiff upper lip” and continue their plan to destroy the British economy in order to save it.
But the rest of the world should take note of this, and maybe set themselves on a different course.