Essentially, the greater each government’s austerity drive the larger the drop in GDP. Are you listening, Mr Osborne? The third graph (furthest to the right) is the important one (the horizontal line depicts the level of austerity from 2009-2012 and the vertical line shows the fall in GDP.
The coup de grace is delivered, however, by Paul Krugman of The New York Times:
“Austerity was costly for the afflicted economies: the greater the tightening between 2009 and 2012, according to the International Monetary Fund, the bigger the fall in output.”
Thus, FT journalist Martin Wolf adds, “the panic that justified the UK coalition government’s turn to a long-term programme of austerity was a mistake“.
“In the long run, the fiscal deficit must close. In the short run, the UK has the chance to push growth. It should take it. So should the US.”