Was just about to say the same thing.

This why a no vote is the right thing to do!

Can they not tell us something that we don’t know this gov is like the last when they where told about the economy now this gov told that total austerity can not work

sure we will vote no as many times as it takes for them to get the picture

It is excessive cost reduction following the financial crash that has put us in this situation now. Causing higher unemployment, lower tax take & a further round of aggregate spending loss on the next turn round the downward spiral.

The fact that we have unemployment benefits has served to slow the spiral down, but is insufficient on it’s own to reverese it..

It’s a common misconception to see welfare benefits & other government spending purely as ‘costs’. They are are ‘costs’ to the government account, but are +spending+, part GDP, GNP in the economy as a whole.

The effect is no different to when households & businesses – the non-government sector – reduce spending, cutting ‘costs’. When you or I do it alone we can save costs. When we all do it, in the aggregate, GDP goes down, people lose their jobs.

The only hope was for exports – net spending of the external sector – to increase to make up the spending gap. But it was always optimistic, given the sheer size of the crash. It also meant that, particularly, the rest of the Eurozone had to increase +their+ spending (Gov or Private sector) to increase our exports to them. But they are reducing their spending too.

The global nature of the crisis & universal adoption of austerity policies in Europe, & only brief, meagre efforts at stimulus in the US, meant relying on increased exports was never going to work. It’s a ‘fallacy of composition’ – if we all try & save at the same time, our economies are only going one way – down. Eventually, after we’ve all hit bottom, they will slowly recover, but this crash is so deep, we’re talking at least a decade & probably longer, unless we adopt different policies. Made worse of course by 4 years of austerity and/or lack of sufficient net stimulus.

Where we (the Eurozone) are now was entirely predictable & predicted by economists such as Australian, Prof Bill Mitchell. http://bilbo.economicoutlook.net/blog/?p=19179

Something nobody ever seems to talk about in the media is the ‘costs’ in lost output caused by the crisis. This is real wealth, goods & services that will not be produced because so many are out of work. Andrew Haldane of the Bank of England wrote a paper estimating these annual costs whilst we vandalise our economies with austerity. It runs, global to many $trillions per year. Sums which absolutely dwarf what would be required to stimulate economies. Extract here:

“World output in 2009 is expected to have been around 6.5% lower than its counterfactual path in the absence of crisis. In the UK, the equivalent output loss is around 10%. In money terms, that translates into output losses of $4 trillion and £140 billion respectively.

Moreover, some of these GDP losses are expected to persist. Evidence from past crises
suggests that crisis-induced output losses are permanent, or at least persistent, in their
impact on the level of output if not its growth rate. If GDP losses are permanent, the present value cost of crisis will exceed significantly today’s cost.

By way of illustration, Table 1 looks at the present value of output losses for the world and the UK assuming different fractions of the 2009 loss are permanent – 100%, 50% and 25%. It also assumes, somewhat arbitrarily, that future GDP is discounted at a rate of 5% per year and that trend GDP growth is 3%.

Present value losses are shown as a fraction of output in 2009.
As Table 1 shows, these losses are multiples of the static costs, lying anywhere between one and five times annual GDP. Put in money terms, that is an output loss equivalent to between $60 trillion and $200 trillion for the world economy and between £1.8 trillion and £7.4 trillion for the UK.

As Nobel-prize winning physicist Richard Feynman observed, to call these
numbers “astronomical” would be to do astronomy a disservice: there are only hundreds of billions of stars in the galaxy. “Economical” might be a better description.
It is clear that banks would not have deep enough pockets to foot this bill. Assuming that a crisis occurs every 20 years, the systemic levy needed to recoup these crisis costs would be in excess of $1.5 trillion per year. The total market capitalisation of the largest global banks is currently only around $1.2 trillion.”

But the really disgusting thing about all this is that there is no need to ‘borrow’ at all to fund a stimulus program.

Our currencies, Euro, £, US$, are ‘fiat’, free-floating. Our currency issuing authorities can issue all the funds we need, debt free. This would entail no inflation risk until our economies return to prior levels of employment/GDP – some years. Simple measures can be adopted then, as & when it occurs, to control it.

The only reasons this is not put forward are purely political & relate to the vested interests of the banking sector’s monopoly franchise on issuing all new money as debt. Plus the ‘useful idiots’ of the intellectually bankrupt & captured mainstream economists. (No austerity for any of them.)