Britain Has No Austerity. Blame its Recession on Last Year's Tax Hikes

Robert Reich has written an article headlined "Britain's Austerity Recession." In it he laments his own created fact that the reason for Britain slipping into a recession recently is due to their austerity; better known as Budget Cuts.

But his claim is a blatant lie. Here are the numbers:

The 2008 U.K. national (excluding local) Budget was £426 billion. It rose to £496 billion in 2010, and the new and current 2012 budget is £527 billion. This is a total increase of 24% within four years.

Increasing your budget six percent in each of four years back-to-back is only austerity when placed against Obama Budgets.

The 2008 U.K. Budget was 26% larger than the one of four years earlier. In other words, England's budget rose on a similar pace from 2005 through 2012.

Hardly "austerity."

When comparing by category the 2012 budget to the 2008 budget, Welfare spending increased 29%; Education 'Investments' as Obama would call it, is up by 20%; and spending on Health Care increased by 21%.

Place U.K.'s budget size against the size of the Country's GDP, and spending is also on the rise: In 2000 the budget was 26% of GDP; it rose to 27.8% four years later; increased to 29% of the GDP by 2008, and is 32.9% of GDP as of 2012.

Daunting austerity?

Local governments in England spent a total £155 billion in 2008, and are spending £185 billion in 2012. In my math book, it is an annual budget increase of 5%. For context, the British population over those four years grew by a total of less than three percent!

If you want, blame the recession on tax! U.K. hiked tax on the Super Rich early last year from 40% to 50%. Instead of getting £1 billion in more revenue, the income to the U.K government from this group dropped by hundreds of millions compared to a year earlier.

Yossi Gestetner blogs at