The disappointing performance of UK GDP in the past couple of years has become a matter of international interest. Many economists, unsurprisingly, have concluded that the UK government has pursued totally the wrong economic strategy, especially with regard to the speed of fiscal consolidation. The adverse comparison of UK performance with the US, a country with similar exposure to housing, financial services and the bursting of the credit bubble, but with less fiscal tightening since 2010, has been widely emphasised. A consensus has developed that the fiscal multiplier has proven to be much higher than was expected in 2010, and many economists have concluded that fiscal consolidation in the developed economies should be reversed or slowed down.
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