By the time Cameron took over in May 2010, the situation was very different. After two years of crisis, the country's debt had shot up to 53.1 percent of GDP because of lower tax revenues, greater demand for public services, and some costly bank bailouts. The first two of these factors were to be expected in an economic downturn; the government used its ability to protect people, to the extent possible, from the full pain of recession. The third was unusual, but unlikely to recur anytime soon.
Nevertheless, the new government remained committed to the plans it had set down five years earlier, in a completely different economic situation. Rather than thinking twice about making deep cuts to the public sector while unemployment was still high, Cameron and Osborne doubled down. They had already decided that 35 percent of GDP was too high for the UK's national debt, even though only Canada had a lower number among the G-7 economies in 2005. Naturally, debt over 50 percent of GDP made them even more determined to wield the axe.
Their main mistake, of course, was in timing. At some point, the UK would have to cut spending and reduce its debt. But 2010 was not the right time. The recovery was young and still precarious, and the increase in debt had not resulted in higher borrowing costs for the government. On the contrary, rates were lower than what they had been in 2005.
So why did this happen? Perhaps, for a start, because the leaders of the governing coalition had little training in economics. Cameron's tutor in Oxford's Philosophy, Politics, and Economics program was Vernon Bogdanor, an expert on British history, constitutional issues, and political systems. Osborne may have had even less exposure to the fundamentals of economic policy; his degree is in Modern History, which sounds quite recent but ends at Oxford somewhere around 1914.
In retrospect, it seems likely that the Conservative Party's current leaders chose their economics via their politics. Their time at Oxford spanned the late 1980s and early 1990s, when Thatcherism and its laissez-faire doctrines were in full force. Embracing the party meant believing in small government and a diminished role for the state in the economy as a whole, with little consideration for the economic circumstances of the moment.
Starting in 2005, Osborne wrote repeatedly of the need to cut taxes and spending in order to compete with other advanced economies. Yet he and Cameron allowed these long-term goals to drive what should have been a short-term economic policy designed to mitigate the UK's recession. Today, most economists accept the importance of fiscal policy as a short-term stabilizer in the economic cycle, and few would recommend the sort of fiscal austerity that Cameron and Osborne inflicted on the British people in the middle of a severe downturn. In essence, they were trying to treat a gunshot wound with diet and exercise. The patient is still waiting for intensive care.
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