The financial crises that began in 2007 confronted many countries with a choice. These nations could either invest to promote economic growth or to consolidate the economy with cuts to spending and tax rises. Each made different choices, with some investing in some areas while cutting others.
There is now a growing consensus that austerity (in the UK) slowed, or in some cases, prevented economic recovery. However, austerity also had important consequences for health and health services. It impacted most on those already vulnerable, such as those with precarious employment or housing, or with existing health problems. It was associated with worsening mental health and, as a consequence, increasing suicides. Yet, this was not inevitable. Those fortunate to live in countries with strong social protection systems, such as Iceland and Germany, escaped the worst of the crisis, compared with those with relatively weaker systems, such as Greece.
Since 2010, austerity – primarily in the form of deep spending cuts with comparatively small increases in taxes – has been the UK government’s dominant fiscal policy, The stated aim of austerity was to reduce the deficit in the UK, to give confidence to the markets, and therefore deliver growth to the economy. While austerity measures have had some impact on reducing the deficit, they have delivered little growth. Meanwhile, public debt has risen from 56.6% of GDP in 2009 to 90% of GDP (£1.39 trillion) in 2013. The policies have had far-reaching impacts on the poorest people in the UK. In 2010, the Conservative-Liberal Democrat coalition government announced the biggest cuts to state spending since the Second World War. These included significant cuts to social security, and the planned loss of 900,000 public sector jobs between 2011 and 2018.
Since the 2008 financial crisis began, those already in poverty have seen their impoverishment worsen, and millions more have become more vulnerable. Economic stagnation, the rising cost of living, cuts to social security and public services, falling incomes, and rising unemployment have combined to create a deeply damaging situation in which millions are struggling to make ends meet. Just one example among many is the unprecedented rise in the need for emergency food aid, with at least half a million people using food banks each year.
As a result of the tax and welfare changes implemented between 2010 and 2014, the poorest two-tenths of the population have seen greater cuts to their net income, in percentage terms, than every other group, except the very richest tenth. The Institute for Fiscal Studies found that the net direct effect of the coalition government’s tax and benefit changes will be to increase both absolute and relative poverty. Over the decade to 2020, an additional 800,000 children are expected to be living in poverty – almost one in four British children. Over the same period, an extra 1.5 million working-age adults are expected to fall into poverty, bringing the total to 17.5 percent of this group. When incomes are adjusted to account for inflation, absolute poverty has already seen its largest year-on-year increase in a decade, rising by 900,000 in 2012.
Let’s drop the ‘United’ from our Kingdom. Erase the word ‘Great’ from Britain, for neither belong to our present day situation. Any suggestions for an alternative prefix is welcome.