Austerity is failing across Europe
How badly is austerity doing? Is it as bad in other countries? Well here’s a new chart that shows government spending and GDP in the Euro Zone from 2008 to 2011:
Countries making cuts are shrinking rapidly, enough to cause debt to GDP to rise even with budget cuts. Obviously, these countries may be growing slowly for other reasons, but the evidence of the impact of austerity runs deeper. Recent analysis by the IMF showed that austerity tended to generate GDP contractions. Further, the UK, which was not undergoing the same kind of stress in funding markets and arguably had more choice about whether to engage in austerity, is also struggling with slowing growth and rising unemployment.