A basic Keynesian analysis would say that Cameron-Clegg's proposed cuts will depress the British economy. On the other hand, the coalition's publicly stated view, I gather, is the standard pro-austerity position: cuts will give confidence to the markets, and somehow that will help the economy recover. My question is: what do Cameron/Clegg really believe? Do they privately accept the likelihood that the cuts will depress the economy but think they can ride it out and make gains through their bold leadership or something? Or are they true believers in austerity who expect the cuts to help and will therefore be surprised if the opposite happens?
SA