Austerity hitting UK economy by almost £100bn this year, says NEF

By agency reporter
February 22, 2019

Almost a decade of austerity has hit GDP per person by £1500 a year according to new analysis from the New Economics Foundation (NEF) – just over £3600 per household. The analysis published on 21 February 2019 shows that the isolated effects of government policy have been to reduce GDP growth every single year since 2010. This has suppressed the level of GDP by just under £100 billion (£99.4 billion) in 2018/?19.

The analysis notes that reduced government spending has also served to exacerbate existing economic imbalances by forcing households to increase their own borrowing to sustain GDP growth. The pursuit of deficit reduction via a policy of spending cuts has also proved a false economy in so far as the lower tax receipts from suppressed GDP have in turn contributed to numerous missed borrowing targets since 2010. The isolated effects of austerity to come are also expected to suppress GDP by a further £18 billion, £117 billion per year in total by 2022/?23 (2018/?19 prices).

Alfie Stirling, Head of Economic at the New Economics Foundation, said: “At this time of year there is often renewed speculation over whether the Chancellor will meet his year-end deficit targets by March. But for nine years, the elephant in the room has largely been missed: the sheer scale of economic damage that these targets have contributed to in the first place.

"The human impacts have always been clearly visible for all to see – from rising homelessness to longer A&E waiting times. But now we can also get closer than ever before to measuring the impact on the economy as a whole – and using calculations that have even been rubber stamped by the government themselves.

“The big picture here is that the livelihoods of people and communities have been made more bleak as a direct consequence of active government decisions. This should not be allowed to happen again.”

* Read the New Economics Foundation analysis here

* New Economics Foundation https://neweconomics.org/

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