The big news in Europe this week is the final unveiling of the UK’s new spending review, which includes many specific measures to cut the nation’s borrowing. Predictably, the event has been surrounded by all sorts of partisan posturing; Labour says it’s too much, too fast, and the Conservative/Lib-Dem governing coalition says there’s no choice but to cut because of Labour’s reckless spending and borrowing when it was in power.
You can see highlights of the budget plan here. Even though these cuts look quite substantial, they will not reduce Britain’s overall debt or even eliminate its annual deficit over the next four years; only the “structural deficit” is targeted. Some sacred cows, like health and education, will continue to see increases in funding.
Nevertheless, the British approach is much more courageous than what we have seen in the USA, where there is no serious talk of austerity measures in the mainstream. Even most Tea Partiers shy away from suggesting cuts in entitlement spending, which is the elephant in the room. Any suggestion that we don’t need a military budget as large as the rest of the world’s combined is shouted down as unpatriotic. And we can always count on Paul Krugman and Brad DeLong to tell us that if the federal government isn’t borrowing and spending all the world’s investment capital to “boost aggregate demand,” it’s being irresponsible. So the prospects for economic sanity to assert itself here are dim.