We all know the saying ‘if all your friends jumped off a bridge, would you too?’ But when it comes to the US and austerity, the question that needs to be asked is “If your closest friends jumped off a bridge and were visibly crippled, would you jump off the same bridge?
The question needs to be asked, because the UK recently lost its AAA credit rating from Moody’s. This is not a huge surprise – the US also has lost its perfect status. But what’s interesting is the justification Moody’s gave:
“”The main driver underpinning Moody’s decision to downgrade the UK’s government bond rating to AA1 is the increasing clarity that, despite considerable structural economic strengths, the UK’s economic growth will remain sluggish over the next few years due to the anticipated slow growth of the global economy and the drag on the UK economy,”
And the response of the government:
“”a stark reminder of the debt problems facing our country”.”
In other words, in the face of a double dip recession and a credit downgrade, the UK continues down a failed austerity path. Specifically, a path that actually CUT corporate taxes while raising the sales tax and slashing government spending. And yet the same mantra that sold them that failed bill of goods – ‘restore confidence of markets, lower taxes to create jobs’ – is still being repeated here. As we come up against another self-imposed ‘fiscal crisis’, we would be wise to learn from the example of the UK.