Austerity Case

Generally speaking, austerity is the practice of reducing governmental spending in an attempt to lower their deficits. The problem with austerity is that it slows growth while cutting services and benefits provided by the government. The government spends a lot of money on services and products in the private sector, so austerity would also raise unemployment and slow down economic growth. Though it seems practical that cutting governmental spending would increase capital to be used to reduce debt, this has never been successful. Austerity also seems to hurt creditworthiness, and when countries are in trouble investors demand a higher return on their investments. The financial crisis in 2008 damaged the financial systems and has really reduced growth. The UK must be careful that they are actually treating the cause rather than just the symptom. All countries must get away from these attempts for fast gains, they just do not work. The conservative party is continuing the austerity measures simply due to the fact that they want to succeed on their own internally. As you can see with any program that just gives handouts, people will begin to expect it and do nothing to improve themselves. The UK believes that by addressing their debt by cutting spending will give them more money to use towards their debt and hopefully keep interest rates down so they can borrow money.