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Since the 2010 election, “austerity” measures have been introduced to reduce government spending in Britain. The main aim of the introduction of austerity was to reduce the budget deficit to generate confidence to markets and stimulate an economic recovery in light of the Global Financial Crisis. Whilst the implementation of austerity measures has reduced the budget deficit, there has been little economic growth in Britain as a result of these measures. The social consequences of the cuts in social services implemented as a result of the austerity plan, combined with a poor economic recovery, has seen the poorest in Britain hit the hardest.
Such an experience of austerity contrasts greatly with the fortunes of the financial sector, which has been thriving since receiving £107.6bn in government support in light of the financial crisis. The large financial institutions were bailed out by the British government after the crisis as they were considered “too big to fail” due to the systemic risk they pose to the economy. This relationship between large financial institutions and the British state has been identified as a “Doom Loop”, as the need for the government to act as a safety net provides a perverse incentive for large banks to engage in greater lending risks than they otherwise would.
