Austerity does not pay – as Krugman, Ireland and Spain show

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George Osborne says unless we cuts we’ll suffer a debt default.

Paul Krugman notes the evidence does not back the argument.

Ireland has gone for austerity more than any other nation. And these, as he shows, are the margins it is paying on its debt – the higher the margin the greater the risk being perceived to be:

And then he draws contract with Spain, which has been slow to embrace austerity (and even then, gone too far, too quickly):

Note the difference?

Now tell me austerity pays.

And that markets are demanding it.

Osborne really has got this wrong.

So has Ireland.