The Global Financial Crisis Shook

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The 2008 - 2010 global financial crisis shook almost all the developed economies of the world. Different countries reacted to this phenomenon by adopting a myriad of fiscal and monetary policies with a view to combat the aftermaths of the crisis and to give their economies a boost (Alesina & Ardagna 2010, p. 40). The UK is no exception either. The British government implemented an ‘Austerity’ economic policy in 2010 to battle the effects of this financial downturn. As a result, the main purpose of this paper is to analyse whether the adoption of such a measure has been fruitful for the UK or not. It will look at both economic and social measures during the period of this policy to evaluate the effectiveness of the austerity policy.…show more content…
In this regard, Alesina et al. (2015) conducted a study on several European countries by constructing a thorough and descriptive data set that documented the actual composition and size of the fiscal policies implemented by the chosen countries from 2009 to 2013 (p. 30). And they found that the adoption of austerity actually worsened the economic conditions of these countries. Another research conducted by Paganetto & Scandizzo (2013) that there is no proof to suggest that the implementation of austerity would enhance development. The authors further argued that there is a very little evidence that austerity might support endogenous growth (p. 256). Blyth (2013) also denied the idea of undertaking austerity by providing real life examples of Spain, Greece, Italy, Ireland, and Portugal. He showed how these nations’ net debt to GDP worsened over the years due to the implementation of strict austerity. According to the author, austerity actually brings about the very consequences that countries implementing these policies try to avoid (p. 20). Guajardo, Leigh & Pescatori (2014) also supported this notion in their study by demonstrating that austerity policies have negative effects on both the GDP and private domestic demands of a country (p. 950). Therefore, studies from all over the world have one opinion in common austerity, that is, even though austerity might be a good choice during the
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