Forum: To cut or not to cut?

By on 16/05/2014
Public sector cuts have prompted angry protests around the world. But are they the way to safeguard economic recovery?

Do public sector cuts help drive growth, or put the brakes on recovery? Tim Gibson invites you to enter the debate

Even though the global economy appears to have turned a corner over recent months, the question about how best to mastermind recovery remains highly topical.

Different governments have adopted their own approach to the process of stimulating, then managing, growth – and their attitude to public spending is a good indicator of where they sit on the economic and political spectrum.

In the UK, for example, the right-of-centre Conservative-led coalition government has pursued a high-profile strategy of reducing the size of the public sector. Over the last four years, Civil Service Reform has led to public sector job losses, estate rationalisation and an uncompromising efficiency drive.

This commitment to public sector cuts has been deeply divisive in UK politics. But it’s a doctrine that has proved popular in varying degrees with governments around the world.

Even in nations like France, where austerity is by no means the instinct of the left-wing governing party, there have been unprecedented public spending cuts over recent months, as politicians try desperately to balance the books.

Moreover, when financial assistance is offered to struggling nations either by their neighbours or by organisations such as the IMF, it comes with severe conditions attached.

Consider the stringent austerity measures imposed on Greece as a result of the EU bailout as a case in point, or the IMF’s demands for public spending cuts when lending to nations such as Cyprus and Jamaica.

Some would say this approach has been good for the global economy. It is, after all, now growing at a strong rate – 3.5 per cent this year and a projected 3.9 per cent in 2015, according to the OECD’s latest figures.

Even so, economic stability is being marred by continued unemployment, with youth unemployment being a particular area of concern. And the view persists in some quarters that the pursuit of austerity is inimical to long-term economic flourishing.

Such an argument was recently rehearsed by the European Network of Debt and Development (Eurodad). It accused the IMF of disabling economic recovery in countries that it supported with loans, because of the conditions attached to them.

More than that, Eurodad argued that the stringent fiscal regimes imposed upon such countries as a condition of accepting funds would make it impossible for them to keep up with repayments on their loans.

The jury, then, is still out on the utility of cuts as a way of driving economic prosperity. But one thing can be said with certainty: politicians around the world seem to agree that some public sector contraction is necessary to help unstable economies get back on track.

Cutting may not be the new normal, then. But it’s certainly a central plank in the recovery plan of most nations.

Have your say

With strong opinions, and no small amount of evidence, on either side of the debate, GGF invites its global readership of public sector professionals to offer their insights.

If you have something to say in this debate, or relevant expertise to share, please use the comment function below. Your contribution will be displayed on the website within 24 hours.

 

About Kevin Sorkin

Pendragon International Media publish www.globalgovernmentforum.com, a community of senior government officials around the world. Global Government Forum is an important international network focusing on impartial, government news, analysis and best practice. The content addresses the real issues facing senior leaders in public service policy and administration today and aims to support them in developing public services for the future. Our aim is to help all organisations engage with this important community by improving understanding and strengthening relationships. I am the founder of the Civil Service Awards and Civil Service Live, which are now established industry leading brands and extremely important events for government. I also launched and published Civil Service World, civilserviceworld.com and Civil Service World Research and Information bringing together the civil service community to enable communication, sharing of best practice, inspire and motivate the civil service community. Over the years I have established relationships with the most senior officials in government and the private sector and have built a very strong and positive reputation across the industry.

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