My guess is that they'll tell you it will shave a few more percentage points off GDP growth. And stateside? Here's what investor and policy wonk Marshall Auerback expects:Īsk your favorite economists what that does to GDP. We're now seeing the impact of deficit reduction on the U.K. Those poles seem to delimit the official discourse in Washington and among much of the commentariat, who argue that boosting the economy requires cutting spending by several trillion dollars over the next few years.
Paul Ryan, R-Wis., whose draconian budget cuts the House approved on Friday on a party-line vote. who's convinced that immediately chopping spending - as opposed to in a few years, when the economy is stronger - is likely to kick-start growth.Īnyone like President Obama, who last week avowed his commitment to quickly reducing the deficit, and like Rep. But certainly the results so far should give pause to anyone here in the U.S. And although the CEBR expects Britain's economic growth to slow in the short-term, the consulting firm expects GDP to pick up in 2015 (such longer-range predictions are notoriously fickle, of course).
is only in the first of a five year-plan to drastically shrink its deficit. "This is going to be a cautionary tale." What both parties won't admitįor now, of course, the experiment continues. "My view is that we are in serious danger of a double-dip recession," said Richard Portes, an economist at the London Business School. for the next several years, the consulting firm concludes. That's likely to restrain economic growth in the U.K. Britain's GDP shrank 0.6 percent in the fourth quarter, even more than the initial forecast of a 0.5 percent dip. As a result, consumer spending is likely to decline 0.8 percent in 2011. London's Center for Economic and Business Research expects British households' spending power this year to fall by nearly $1,500, compared with 2009, before the U.K. As Britain hacks away at its deficit, personal income is plunging even faster than after the Great Depression. Republicans and Democrats eager to slash federal spending should glance across the pond, where the U.K.'s own experiment in austerity is going haywire.
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