Austerity under fire as UK expert contradicts Prime Minister

In the UK, the head of the Office for Budget Responsibility has contradicted Prime Minister David Cameron over the impact of austerity on the UK economy.

Robert Chote, the head of the OBR, contradicted a claim Mr Cameron made this week in a speech about the economy, in which the Prime Minister said the forecaster does not believe cuts are reducing growth.

In fact, as Mr Chote wrote, the OBR believes that cuts in spending and increases in tax will depress economic activity, meaning lower growth.

There is a growing international debate on the real impact of austerity. In the US for example, Paul Krugman writing in the New York Times has been a regular critic of European austerity, citing a cycle of in-again and out-again recessions and record unemployment.

But back to the UK where it is clear that there is no definitive consensus on austerity. As Mr. Cameron blames weak economic growth in the UK on international factors including the eurozone crisis and the high oil price, the head of the OBR puts the blame squarely at the feet of “fiscal consolidation”.

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