this post was submitted on 28 Sep 2025
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Britain is slowly going bust (www.economist.com)
submitted 1 day ago by schizoidman@lemmy.zip to c/europe@feddit.org
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cross-posted from: https://lemmy.ml/post/36750028

https://archive.ph/zZJ2W

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[–] avidamoeba@lemmy.ca 39 points 1 day ago* (last edited 1 day ago)

Fixing the problem with austerity:

The political failure is all the greater because it is abundantly clear that the fiscal adjustment should start with pensions and the welfare budget. Britain spends about 6% of GDP supporting pensioners, up by over a third this century. Generous, automatic increases to the state pension have become unaffordable. So have benefits to the 15% of Britain’s working-age population who now claim jobless allowances, after a surge in disability claims since the pandemic. The scale of the increase is impossible to justify. The system has been gamed.

Fixing the problem with taxes:

The trouble is that Labour promised before it was elected not to raise broad-based taxes on income and consumption. The hunt for alternatives is a risky business. Many bad ideas have been hinted at, from taxing pension contributions to imposing capital-gains tax on primary residences. Taxes on narrower bases cause more distortion, because the rates must be higher. The party’s left flank wants heavier taxes on capital. That might deter investors, including those who buy Britain’s government debt. As well as risking economic damage, creating a concentrated group of big losers can be politically fraught. Some backbenchers fantasise about throwing fiscal caution to the wind. If ministers overplay their hand, they could find themselves making a third U-turn.

Note how the author is only highlighting the negative consequences of tax increases, not austerity.