Pros And Cons Of Austerity

Austerity is the cutting down of government spending in an attempt to rescue countries from states of budget deficits. Issues concerning the decision of many European governments to adopt austerity measures have been discussed all over the world in recent times. There has been much controversy as to whether austerity is a good thing or not. Many Keynesians with Paul Krugman at the front line have condemned European governments for adopting austerity measures. Counties like Greece have been cited as proof that austerity is a sheer evil and only leads to destruction. However, there are always two sides of a coin. Austerity has proven to be not always so bad. Some countries have managed to employ austerity measures and yet have soared through

An austere individual would be someone who lives within their budget: that is, who spends less than their annual income. But that is not what economists tend to mean when they talk about austerity. A government can impose an austerity program and still spend far more than it receives in the form of taxes; indeed, the British coalition government had a deficit of 9.3% of GDP in the first year of austerity, a very high figure by peacetime standards. But because this was less than the 11% of GDP in the year before, it is considered austerity (Wood,

However, this is not the case; austerity is not always the solution, it may yield results alright, yet it is not meant for every case. For whatever the argument, the economics of Britain are no different than that of other economies especially in the advanced world. Austerity in depressed economies is certainly not a necessity. The situation of Greece can always be cited as an illustration. In times of a recession, slowing down growth is only bound to worsen the