The British government yesterday unveiled their budget plan for the next fiscal year which featured deep budget cuts. Nothing was spared the chopping block. The average government department cut averaged 20%. Currently, there’s a debate as to whether or not this budgetary practice is sufficient to turn an economy around and restore growth. When governments have done this before in the past on such a scale, sometimes it has worked, and sometimes it hasn’t. I’ve not entirely made up my mind. It does, without doubt, make it easier and cheaper for governments to borrow money, but if your aim to to eliminate a deficit, that doesn’t really matter. But I do think that part of it has the net effect of just enhancing peoples’ expectations that economic growth will occur, making it a bit of a self-fulfilling prophecy kind of phenomenon.
Good luck Britain. We’ll be following your example in a few years, but, being Americans, we won’t do it until the last possible minute. You know how we procrastinate. At least you should. Remember WWII? It took us long enough, but we eventually got into the war. Well, it’s kind of like that. We don’t really do anything until we’re absolutely forced to. See you on the other side later.