Professor Victoria Chick, Ann Pettifor and Geoff Tily have updated their July 2010 publication 'The Economic Consequences of Mr Osborne' with a new preface - Mr Osborne and the economists' advice. From the introduction:
Having missed the genuine threat of the private debt bubble, the economics profession misread disastrously the increase in public debt. In their 2009 This Time is Different, Kenneth Rogoff and Carmen Reinhart discreetly warned:
However, the surge in government debt following a crisis is an important factor to weigh when considering how far governments should be willing to go to offset the adverse consequences of the crisis on economic activity. (290)
Shortly afterward their paper ‘Growth in the Time of Debt’ set an explicit threshold of 90 per cent of GDP above which adverse economic conditions became statistically significant. In the UK, academic, City and media economists warned politicians in no uncertain terms that it was imperative to reduce the public debt. On 14 February 2010, 20 of the most senior UK economists wrote to The Sunday Times castigating the Labour government for inadequate efforts on deficit reduction and setting the tone not only for the general election of that year but seemingly ever since. In June 2010, the Coalition government took office, and George Osborne announced fiscal consolidation plans to meet the concerns of Labour’s critics.
Some six years later, vast damage has been inflicted on public services and the public sector workforce. Five years of consolidation became ten years, with total spending cuts virtually doubling in size. The economy has barely expanded in per capita terms relative to the pre-crisis peak, and public sector debt as a share of GDP is still rising in spite of a vast fire sale of public assets.
Our analysis showed it would have been unwise to expect anything else.