In Europe Cutting Taxes and Spending Leads to the Best Results


Credit: garryknight/wikimedia

Matthew Melchiorre, the Competitive Enterprise Institute's Warren Brookes Journalism Fellow, has written a report on so-called austerity in Europe showing that many governments, despite their rhetoric, have not cut spending or taxes and that those governments that do implement austerity have experienced better economic performance than countries that did not cut spending and taxes.

Critics of supposed austerity in Europe oftentimes compare the economic performance of European countries from the same date, ignoring the fact that European governments implemented austerity programs at different times. Melchiorre takes this into account in his report. 

Melchiorre's report categorizes the European countries being examined (all of the E.U. members) into nine categories, as shown below:

Credit: CEI

The chart highlights one of the inconvenient truths for the anti-austerity movement in Europe; governments that have implemented so-called austerity, like the U.K., have increased spending and taxation. I have written before on the myth of British austerity.

Read the whole report below:

Veronique de Rugy, senior research fellow at the Mercatus Center and Reason contributor spoke to Reason TV about austerity in Europe last year: