As the Guardian notes:
The European Union's focus on austerity has hit the limits of public acceptance, according to the head of the EU's executive arm, as Brussels joined the International Monetary Fund in raising concerns over the impact of public spending cuts.
José Manuel Barroso, president of the European commission, also signalled that governments would be given more leeway if they were struggling to get their budget deficits within the required ceiling of 3% of GDP.
He said the argument raging over the merits of austerity versus more public spending was a false debate – the answer was to combine the two, although public spending cuts alone would not provide the solution.
Why has it taken so long for this to be realised when it was obvious before the current economic crisis developed? There is only one explanation, and it is the failed logic of the economics profession that requires, as a pre-condition of working in most university economics departments, a belief that markets solve all problems, governments solve none, and which rigs (I use the word wisely and advisedly) its theory and research to support this view.
The result has been a raft of bankrupt ideas. That austerity works is just one of them.
More importantly though, we now realise that this data merely supported the mantra and was not the cause of the belief.
The trouble is, we have all paid the price.