Economists agree: Austerity is bad for you


You may have seen the infographic above on the social media yesterday. Today, this blog received confirmation of its claims from the Centre For Macroeconomics.

The CFM’s survey asked: Do you agree that the austerity policies of the coalition government have had a positive effect on aggregate economic activity (employment and GDP) in the UK?”

The response was clear: Only 15 per cent agreed, 18 per cent neither agreed nor disagreed, and 66 per cent disagreed. According to the CFM: “Ignoring those who sat on the fence, 19 per cent agree and 81 per cent disagree with the proposition. This ratio is unaffected by confidence weighting.”

This evidence is conclusive disproof of the claims in the ‘business leaders’ letter to the Daily Telegraph that was published earlier this week. But then, it seems that letter was written by Conservative Campaign Headquarters and its 100+ signatories were inflated by the addition of Samantha Cameron’s friends.

In its summary of responses, the CFM notes that Professor Simon Wren-Lewis (Oxford) asked: “This is a joke, right? The only interesting question is how much GDP has been lost as a result of austerity.”

On his own blog, Mainly Macro, Prof Wren-Lewis adds: “I myself participated in Radio 4’s World at One (about 11 minutes in) as a direct result of the survey. Robert Peston went as far as to ask: “Who to trust – business leaders or economists?” I liked the way he introduced his post:

“’Neither business leaders nor economists have a monopoly of wisdom on what’s good for Britain or are free from political bias. But it is perhaps therefore all the more important to remember that those paid to think about how best an economy should be run don’t necessarily agree with those paid to run companies.’

“He might have also added that, probably without exception, we are paid a lot less than business leaders, so the danger that our opinions might be influenced by Labour policies like reintroducing the 50p income tax rate or introducing a mansion tax is perhaps also smaller!”

On the second question – whether the election’s outcome would have non-trivial consequences for aggregate economic activity (employment and GDP) – if those who neither agreed nor disagreed are excluded, the majority rises to 93 per cent.

They’re saying a future Conservative-led government will harm the UK economy.

Follow me on Twitter: @MidWalesMike

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One Comment

  1. Gazza April 2, 2015 at 3:25 pm - Reply

    OT – ConMen Conservatives Cunning Pension Drawdown tax plan

    I was wondering why it appears that the ConMen Conservatives believe that Pensioners would willingly become Pensioner Apprentacies, as detailed by TheVoid at :

    Now I know the answer. Pension draw down and getting caught out in Paying $0% tax, and losing your years personal allowance on top.

    [Mike – delete if you plan to do an article]

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