Chapter

The United Kingdom: The Triumph of Fiscal Realism?

Andrew Gamble

in The Consequences of the Global Financial Crisis

Published in print May 2012 | ISBN: 9780199641987
Published online September 2012 | e-ISBN: 9780191741586 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199641987.003.0003

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The financial crash of 2008 ended a long period of growth in the British economy. Measures taken to prevent the crash turning into a slump transformed the banking crisis into a fiscal crisis, with the result that how to handle the resulting deficits dominated UK politics before the 2010 election. Debate focused on how quickly the deficit should be reduced, whether this was a structural or cyclical deficit, and what policies were needed to maintain the confidence of the financial markets. After the election, the Coalition Government announced plans to eliminate the deficit within five years. This marked a return to fiscal conservatism and a politics of austerity, but the plans aroused skepticism because of the optimistic assumptions they made about future economic growth, the pace of recovery, and the ability to expand exports, which made it unlikely that the targets could be met. The political will of the Coalition to carry through the cuts was also uncertain.

Keywords: financial crash; deficit; fiscal conservatism; coalition

Chapter.  7689 words. 

Subjects: Political Economy ; Financial Institutions and Services

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