Since at least 2010, British political discourse has been dominated by ‘austerity’. With British government finances in a mess following the banking crisis of 2007/2008 and subsequent economic collapse, the coalition acted to close the resulting deficit relying primarily on spending cuts rather than tax rises. This is the ‘austerity’ that is frequently talked about.
The trouble is that its difficult to actually see it in the figures. The chart below shows British government spending since 1900 in inflation adjusted, 2005 sterling.
Source: UK Public Spending
The post-2010 period does stand out, but not, I think, as a particularly ‘austere’ time in terms of government spending. Indeed, all of the British government’s six highest spending years since 1900 have come since 2010. British government spending has risen from £702.09 billion in 2010 to £748.12 billion in 2015. What has happened since 2010 is that the rate of increase of government spending has slowed drastically.
So do we have ‘austerity’? If austerity = a decline in the increase of government spending, then yes. If austerity = a fall in government spending, then no.