Saturday, November 8, 2014

UNCTAD report shows the size of austerity

The last Trade and Development Report has been published a while ago. As always, a must read. The graph below shows the change in real government spending and also compares the actual real government spending with long-term government spending growth.
The report says: "on the whole, governments in developed countries adopted contractionary fiscal stances from mid-2010 to the end of 2013, when compared with the long-term trend." My only surprise was that France is not in the austerity group. The European periphery, and the US, are actually leading the austerity effort.

PS: In the US spending peaked in the 3rd quarter of 2009, and then it has been basically contracted ever since (here).


  1. Concerning France, the fact is that until last year austerity was mainly made up of rise in taxes, which is contractionary too. Moreover, french automatic stabilisers still are particularly strong while unemployment and poverty continue to grow.

    Now the trend is changing. Hollande recently promised that there wouldn't be anymore rise in taxes. There should be more spending cuts in the years to come, nobody really dare to question austerity. Debate is more between partisans of radical austerity and those who support a moderate austerity. Complete madness.

    1. The real madness is in the countries which issue their own currencies, with the US being the chief lunatic according to the above chart. In contrast, EU periphery countries are arguably forced to impose austerity so as to become competitive with Germany. I.e. common currencies have their problems. Those problems do not apply to the US or UK.


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