The Guardian view on the austerity delusion: economies cannot cut their way to growth | Editorial

Economics is a religion where rhetoric persuades voters to believe bad policies can have good results

Paul Krugman, the Nobel prize-winning economist, warned a decade ago against thinking about budget deficits in terms of bond vigilantes" and confidence fairies". He said politicians - mostly, though not exclusively, on the right - argued that unless governments cut their deficits, bond vigilantes would pressurise them by forcing up interest rates. But if they did cut them, the story went, then the confidence fairy" would magically stimulate so much private spending that this would compensate for the loss caused by budget cuts. This fiction was heard across the EU, Britain and the US.

Prof Krugman was right. Austerity didn't produce economic growth. The confidence fairy is as unreal as the one looking for children's teeth. But the political rhetoric has not gone away. Every major UK political party wants more economic growth, and the message is that to grow the economy means bearing down on the deficit. The Office for Budget Responsibility forecast in March that the UK economy would grow by about 2%. This looks wildly optimistic. The International Monetary Fund sees two years of about 0.5% growth. It is a dangerous delusion to think that economies can cut their way to growth.