It’s (Rarely) the Government’s Fault

As the U.K. slipped into a technical recession – two quarters of negative GDP growth – the media, industry, and opposition parties were quick to pounce on the U.K. government austerity measures. Either they blamed the U.K. government for the slowdown outright, or suggested that austerity during an economic slump are foolish.

The data says that the slowdown did not happen because of government austerity. Government services actually added to GDP last quarter.


The construction industry was quick to blame the U.K. government for slashing public housing expenditures, but this doesn’t explain all of the drop in construction. The public housing cuts announced amounted to £1.7 billion, which is insignificant compared to the U.K. economy, or total investment in general. The austerity measures taken by the U.K. government are simply not substantial enough to cause, or make worse a recession.

Really, the blame placed on the U.K. government for the economic slowdown is no different than what happens in any country. When times are good, the sitting government is quick to take credit, even if it’s not really their doing. When the economy is bad, businesses, the opposition and people in general are quick to blame the government, when, again, even if it’s not really their doing.

Is U.K. austerity ill-timed? Probably not, the outlook on the U.K. economy is actually quite positive.

The Confederation of British Industry (CBI) said it was very surprised by the figures coming out of the Office of National Statistics and insisted that growth in the manufacturing sector was looking promising.

Of course, very severe austerity measures that take place in a fixed exchange rate environment can absolutely have immediate consequences on the economy. But for countries outside of the Euro, governments can only really set out policy that have long-term implications for the welfare of its citizens, but short term fluctuations in the economy are rarely solely the fault of the current government.