Alessia Pierdomenico / Reuters Members of the public walk past the Bank of England in central London, June 3, 2008.

Austerity Bites

Fiscal Lessons from the British General Election

This May’s general election wins for British Prime Minister David Cameron and his Conservative Party confounded opinion pollsters and surely surprised Cameron himself. Despite presiding over five years of budgetary austerity and welfare cuts, a drop in wages by over eight percent from their 2007 peakzero growth in national productivity (which reflects the growth of part-time low-skill employment since the crisis), and missed budgetary targets, the electorate punished not Conservatives but rather their junior coalition partner, the Liberal Democrats, who lost all but eight of their 57 seats in the House of Commons. The Labour Party’s failure to improve significantly on its weak 2010 performance, paired with the quirks of the United Kingdom’s first-past-the-post electoral system, did the rest of the work needed to secure a Conservative victory.

Commentators on the right have been quick to interpret this result as a triumph for austerity politics and fiscal rigor over supposedly anticapitalist (or at least pro-Keynesian) policies advocated by former Labour Party leader Ed Miliband, who resigned following the results. The Conservatives’ political message throughout the election revolved around the “tough decisions” it had made to cut government programs in order to reduce the budget deficit left behind by the previous Labour administration. Meanwhile, on the center-left, Labour’s failure is seen as proof that it should never have abandoned Tony Blair’s “third way” strategy of socially progressive neoliberalism, which had successfully attracted aspirational middle-class voters. 

Labour Conservatives Debt Bank Bailouts 3

Britain's Prime Minister David Cameron shows the letter by a former Labour Treasury Minister saying "there is no more money", as he speaks to supporters at Squires garden centre in Twickenham, London, Britain May 5, 2015.

A closer look at this election’s results suggests that both of these interpretations are off the mark. Although Labour gained only 700,000 votes since 2010, the true cause of the Conservatives’ success is the spectacular collapse of the Liberal Democrats. By associating with the Conservatives’ austerity policies, the Liberal Democrats forfeited some 4.5 million votes—two-thirds of its vote share. The Conservatives’ real vote share—although the party claimed that it provided Cameron with a mandate to govern—only increased by half a percent. Cameron’s party may have another five years in power, but the

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