As we near the time of elections in the United Kingdom there is a greater focus on the condition of the economy, and what needs to done in order to return the economy to its previous strength. Austerity has been the way forward, and whoever wins the next general election will have to maintain the burden if it is to be effective.
Now austerity is often subject to ferocious attacks as to its actual benefit to society, and that cuts are never made in proportion to the people they are affecting. I am admittedly glad that I am not in the position of the Chancellor of the Exchequer having to make those unbelievably difficult decisions. There seems to be no way to please everyone, but that is not a new concept in the game of politics.
From an economic perspective we can note that in terms of policy its incredibly difficult to decide what extent a cut occurs, and the time frame for it to occur. If you protect the elderly it might mean putting the younger generation at risk of unemployment or a reduction in education. There are insurmountable opportunity costs that we may realise if we start looking at what to cut. The Financial Times have produced a UK budget deficit calculator, which brought me to frustration as no decision seems favourable to any extent (except cutting overseas aid, and freezing elements of the defence budget). I highly recommend having a go at the calculator, because I never cut enough to reach the required amount, with my best effort being £38 billion:
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