Thursday, June 03, 2010

Savage cuts lose elections

Vox EU has an article which seeks to prove that "it is possible for fiscally responsible governments to engage in large fiscal adjustments and survive politically. Moreover, acting on the spending side is no more costly that doing on the tax side". They've got a rather strange method of assessing this, which looks at how many changes of government occurred while the cuts were taking place.

I think that the evidence suggests the opposite - when a government slashes public spending, they are punished for it by the voters. I did a simple test, which was to take the examples given by the paper, and look at what happened in the first elections to take place after the cuts started.

Portugal 1980. Next election in 1983, right-wing coalition defeated, Socialist Party tops the poll.

Ireland 1987. Next election in 1989, "the result was a disaster for Fianna Fáil", forced to enter coalition with Progressive Democrats.

Netherlands 1990. Next election in 1994. "Landslide loss for the governing coalition of PvdA and CDA. The two liberal parties, VVD and D66 profited from this. As did two parties for the elderly, AOV and Unie 55+, and the socialist SP".

France 1993. Next election in 1997. Right-wing government "obtained its worst result in a legislative election during the Fifth Republic."

UK 1993. We know what happened here.

Sweden 1993. Next election 1994. Centre-right government defeated, Social Democrats return to power.

Austria 1995. Next election 1999. Government parties lose support, the Fascists finish second.

So past experience in Europe is that governments which undertake large fiscal adjustments by cutting public spending lose elections. It's up to Labour to make sure that the Coalition doesn't make history by bucking the trend and avoiding defeat at the next election.

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