Abandoning austerity is no solution

By Daniel Mahoney

Recent weeks have seen the issue of the public sector pay cap re-surface and several Cabinet members have suggested they would be open to taking another look at the topic. However, “Abandoning austerity is no solution”, published by the Centre for Policy Studies on Thursday 13 July 2017, suggests the government should not abandon its deficit reduction targets or make significant increases in tax in order to lift the cap or increase departmental spending.  The CPS analysis also shows that for those OECD countries with a high budget deficit in 2010 (over 5% of GDP), there is a strong correlation between bigger spending cuts and achieving a larger reduction in the deficit, higher average growth rates, a larger fall in proportionate unemployment and marginally better wage growth.

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