AltAusterity Digest #67 September 28 - October 3, 2018

It was a turbulent week for Italian politics and markets as a potential clash may emerge between Italy’s populist government and the EU. Italian economy minister, Giovanni Tria, has backtracked from his announcement last week that Italy would keep its budget deficit at 2.4% for the next three years. Instead, Tria has announced that the deficit will remain at 2.4% for 2019, and then be reduced starting in 2020. The initial announcement for maintaining a steady deficit, as well as plans for social spending caused the Italian bond market to stutter, while the newer austerity announcement saw a reversal of the market drop. The European Commission has already warned Italy against breaching deficit targets.

For The Guardian, Richard Vize discusses the impact and current narrative around public service cuts in the UK. While the worst of the job cuts for public sector workers in Britain may be over, local governments remain underfunded, pay is still being suppressed, and precarious work arrangements have increased. Studies in Britain have found that austerity is shortening life expectancy, that gun and knife crime have risen while police numbers have declined, and that the NHS remains chronically underfunded and understaffed. Despite relatively better circumstances for public sector workers in the last few years, the deep and extended period of public service cuts in the UK has left a deep trench to climb out.

New data has suggested that the greatest benefits from last year’s Republican tax cuts are going to shareholders, and not workers. Of the five different priorities for the tax savings listed by companies, spending on capital investments came first, followed by padding cash reserves, boosting investment in training and development, acquiring new businesses, and rewarding shareholders. Using money from the tax cuts, U.S. companies have repurchased more than $827 billion in stock in 2018, topping the previous record set in 2007. These “stock-buybacks” are used to boost the value of a company’s shares, which in turn boosts executive pay.

At the Conservative party conference on Wednesday, UK Prime Minister Theresa May claimed that “the end is in sight” after a decade of austerity. May lauded the work of her government and the Chancellor in brining down the national debt for the “first time in a generation.” She went on to say that getting to this point has not been easy as public sector workers have had their wages frozen and that local services have had to do more-with-less. Britain’s deficit has fallen from about 10% of GDP in 2010, to 2 percent today. However, Chancellor Philip Hammond has said that Britain’s public debt remains too high at 84% of GDP and has promised to keep brining the ratio down year-over-year. With Brexit looming, it remains uncertain whether the austerity agenda is really over or will remain under the Conservatives.

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