The UK Macroeconomic Policy Debate and the British Growth Crisis: Debt and Deficit Discourse in the Great Recession

Abstract

The central political battle in Britain’s response to the global financial crisis (GFC) has been over the meanings of fiscal rectitude and economic credibility. This chapter analyses that battle by charting some of the key decisions taken by the UK Government, situating these in the context of ideas about management of public finances and Keynesianism. It explores what has happened to debt and deficit discourse, and its political salience in the UK after the GFC. One aim of this chapter is to demonstrate the historically contingent nature of fiscal policy and sustainability assessment by comparing their shifting, conjunctural constructions, rooted in underlying political economic assumptions, and how these different underlying assumptions have become the stuff of a contested politics within the UK and in wider economic policy debates. Assessment of fiscal policy and fiscal sustainability must be placed in the context not only of material conditions in the national and global economy, but also of ideational factors — conventional wisdoms and climates of opinion (and their normative underpinnings) about fiscal policy, fiscal positions, and sovereign debt.