The 2008 financial crash was not caused by an oversized public sector, but by an out-of-control banking system. Despite this, the government has been promoting economic growth through austerity measures, aiming for a budgetary surplus. This approach, however, is flawed, as the economy is not a household budget and should not be managed as one.
Public spending cuts have resulted in a slowdown in economic growth, as they reduce demand in the economy. The government’s plan to achieve a budgetary surplus by 2020 is unlikely to be successful, as it depends on a high level of economic growth, which is not guaranteed.
Instead of focusing on reducing the deficit, the government should invest in the economy, particularly in areas such as infrastructure, education, and health. This would stimulate economic growth and lead to a natural reduction in the deficit.
The government’s current economic strategy is based on a misunderstanding of how the economy works. It is time for a change in approach, one that recognises the importance of investment and growth, rather than austerity and cuts.
Go to source article: http://www.theguardian.com/commentisfree/2015/oct/28/2008-crash-government-economic-growth-budgetary-surplus