It’s amazing how quickly history repeats itself in the realm of economics. In the immediate aftermath of the 2008 financial crisis, in both London and Washington, there was a clear political consensus in favour of stimulus policies aimed at rescuing the global economy from collapse. But that consensus disintegrated quickly. 

After a period of sustained stimulus spending under Gordon Brown, Britain embraced austerity in 2010, with the election of the Cameron / Clegg coalition government. The US followed suit three years later, in 2013, when Barack Obama – whose initial fiscal response to the Great Recession was already weak – signed off on $1.2 trillion worth of cuts as part of a bipartisan budget deal with the Republicans. 

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Ten months after Boris Johnson led his Conservative Party to an epic election victory in the United Kingdom, surveys are showing an increase in support for Scottish independence — literally, the break-up of the British state.

Enthusiasm for ending Scotland’s 313-year-old union with England has spiked in the past, notably in the run-up to the 2014 independence referendum, when it looked, briefly, like the Scots were going to vote in favor of leaving the UK. (The final result was 55 percent to 45 percent against.)

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Six weeks ago, Boris Johnson dismissed the idea of using spending cuts to pay off Britain’s rapidly-inflating coronavirus debts. “I’ve never particularly liked the term that you just used to describe government economic policy and it will certainly not be part of our approach,” the prime minister told a reporter during a Downing Street press conference on 30 April. “Austerity, by the way, was the term you just used.”

At first glance, the explosion of state expenditure triggered by COVID-19 seems to have been embraced by the Conservative Party. According to the Office for Budget Responsibility, the UK’s deficit will hit 15 per cent of GDP by the end of 2020 and public debt will top 115 per cent by the middle of 2021. These are staggering figures — at the height of the 2008 financial crisis, Britain’s deficit didn’t exceed 11 per cent of GDP.

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Between June and September of last year, the International Monetary Fund provided an emergency bailout package to the Argentinian government totalling nearly $60 billion.

The move was prompted by Argentina’s descent, during the preceding months, into headlong financial collapse, fuelled by a rapid pile-up of foreign debt and a dramatic decline in the value of the peso.

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Gordon Brown is back. Again. Earlier this week, to mark the tenth anniversary of the collapse of Lehman Brothers, the former prime minister treated us all to another nakedly self-serving political intervention.

In two separate puff piece interviews – one with the Guardian and one with the BBC – he issued a series of stark claims and denunciations.

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In the summer of 2010, the UK embarked on a strange economic experiment.

Britain, then in the grip of a post-crash recession, had just elected a new government led by the Conservative party. In his first budget, the Tory finance minister, George Osborne, reeled-off a litany of cuts: public sector pay would be frozen, pensions reformed, disability and housing benefits slashed, and a raft of progressive tax credits abolished. In total, more than £30bn ($50bn CAD) would be stripped from state expenditure every year until 2015.

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If there’s one thing that Jeremy Corbyn has been absolutely consistent about in recent years, it’s that the Tories’ spending cuts are not, as the right monotonously insists, economically necessary, but instead form part of a broader ideological project to shrink the public sector and destroy the welfare state.

“Parliament can feel like living in a time warp at the best of times,” the Labour leader wrote in 2015, “but this government is not just replaying 2010, but taking us back to 1979: ideologically committed to rolling back the state, attacking workers’ rights and trade union protection, selling off public assets, and extending the sell-off to social housing.”

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2017, it seemed, should have killed the campaign for Scottish independence stone dead.

At the UK general election in June, the pro-independence Scottish National Party (SNP) lost a third of its Westminster seats, forcing SNP leader Nicola Sturgeon to “reset” her plans for a second independence referendum. Then, in August, new analysis showed that an independent Scotland would face a projected budget deficit of 8.3 per cent – the largest of any EU state. And on top of that, major splits have begun to emerge within the ‘Yes’ base, as younger, more radical activists sympathetic to Jeremy Corbyn and the Labour Party have clashed with older, more conservative nationalists loyal to the SNP. 

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I was born in 1986, the year of Margaret Thatcher’s Big Bang deregulation of the British banking system, and I was 22 when the global financial crash hit in 2008. For most of my adult life, the UK economy has been in crisis. First recession, then austerity, and now stagnation, with the prospect of another serious, Brexit-induced downturn on the horizon. Economists anticipate a decade or more of lost growth; a semi-permanent, Japanese-style slump. Prepare yourself, they say, for disappointment. That job you wanted? Gone. That house you’ve been saving for? No chance. That mountain of debt you’re carrying? You can keep it. Forever. It’s yours – along with flatlining wages, part-time employment, and income-eviscerating rents.

I belong, in other words, to the so-called ‘millennial’ generation, a category that includes people between the ages of 18 and 34 – or, more broadly, people who reached adulthood after the turn of the millennium. Millennials are significant for two reasons: they are the first age group in recent history to experience a standard of living lower than that of their parents, and they are really, really leftwing.

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Against expectations, the Chancellor’s visit to Glasgow last week was a success. Speaking to a gathering of Scottish business leaders, and armed with a hefty new Treasury report, George Osborne set-out a detailed critique of SNP plans for Scotland to retain the pound after independence, a key feature of the nationalists’ 2014 prospectus. But framing his specific warnings about the pitfalls of a “Eurozone-style” monetary union was a broader attack on the economics of separation: the size and scale of the UK’s economy shields Scots from the “rapids of globalisation” – leave it and Scotland could be exposed to a meltdown of Irish, Greek or Cypriot proportions. This is a powerful line, repeated with brutal efficiency by unionist campaigners. The problem, however, is that it simply doesn’t stack up. In fact, Scotland’s vulnerability to global economic shocks is amplified by its continued membership of the UK.

Two recent reports – The Mismanagement of Britain by the Jimmy Reid Foundation and The British Growth Crisis by the Sheffield Political Economy Research Institute (SPERI) – shatter the notion of British economic strength. The former, written by Scottish economist Jim Cuthbert, out-lines the long-term decline in the competitiveness of the UK economy. Cuthbert argues that the growing deficit in the UK’s trade in general goods and services from the 1970s onwards was disguised first, in the ‘80s, by high North Sea oil tax receipts and then, during the ‘90s, by revenues from an increasingly dominant financial services sector. The underlying deficit became more pronounced as successive Westminster governments, Conservative and Labour, allowed Britain’s manufacturing base to erode. Ultimately, this made the British economy over-reliant on a handful of large financial institutions operating at the heart of the international financial system.

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