The most important service the economic historian can offer is to place contemporary policy into context. In this sense analysing the CSR is easy: it represents an unprecedented slowdown in public spending. Such reductions have never before been attempted in modern British history – nor anywhere within the OECD. They are so great that, on certain assumptions about inflation, the real stock of public spending will drop for the first time in many decades. Previous crises in 1922 (the ‘Geddes Axe’), 1931 (the Report of the May Committee), 1947 (sterling convertibility), 1967-68 (devaluation), 1976 (IMF crisis) and 1992-93 (ERM debacle) did lead to cuts to planned rises in public spending. But none of these were on anything like the scale of what the UK economy is now being asked to bear. Other previous examples of deficit reduction – notably Canada and Sweden in the early 1990s – have been slower, and raised more taxes as part of the policy mix. In short, attempting to move into balance within four years, and doing so mainly through actual cuts, is a move into totally uncharted waters. We are left with modelling and inference when we come to measure the macroeconomic impact, and the effect on services. Economic history is little guide when governments break so rapidly with the past. We may expect growth to slow, though probably not stop; a series of painful cuts that do not always appear internally consistent (for instance over Britain’s aircraft carriers) and a rise in inequality – troubling outcomes indeed.
