Is the UK stuck in a permanent state of austerity?

Upon arrival in 2010, David Cameron ushered in an ‘age of austerity’ which initiated deep cuts to public spending. His aim: reduce the deficit. Despite numerous attempts by Cameron, the following Conservative leaders, and now the Labour Chancellor Rachel Reeves, the UK has run a budget deficit every year since 2001. Austerity policies have not stopped since implementation. The question therefore follows: ‘Is the UK stuck in a permanent state of austerity?’  

During Cameron’s ‘Age of Austerity’, his coalition government implemented £110 billion in cuts. He achieved this by reductions in welfare payments, housing subsidies, and social services. Consequently, these painful measures meant low growth and a significant rise in public debt.

In 2020–21, austerity measures were reversed as an emergency measure to fund crisis response. This pandemic-era spending did not last long, and a second period of austerity was introduced under Johnson, Truss, and Sunak. They oversaw cuts to Universal Credit and public services, all during a cost-of-living crisis. Now under a new Labour administration, Rachel Reeves has announced further austerity measures, which include £5 billion in welfare cuts and a £2 billion Whitehall efficiency drive. 

Public debt continues to rise despite austerity measures, reaching over £2 trillion in 2025

In spite of all these measures, government debt, which was 36.6% of GDP in 2000, rose to a high of 107.5% in March 2021. However, it has since decreased to 95.5% in February 2025. There has been a deficit between taxation and spending every single year since austerity was implemented, reaching a peacetime record of 15.1% of GDP in 2020/21. Austerity policies have led to a stagnation in economic growth, increased inequality, and weakened public services. There has been £30 billion in cuts to welfare, housing subsidies, and social services between 2010 and 2019. Public debt continues to rise despite austerity measures, reaching over £2 trillion in 2025. Austerity has also had a major impact on society, with the International Inequalities Institute estimating that the cuts have cost the average person half a year in life expectancy. Many argue that austerity policies have not achieved their goal, especially as debt has risen rather than reduced.  

Historically, nations have reduced their deficit through a combination of austerity measures, tax hikes and economic growth. However, each one of these approaches affects the other and the balance is difficult to strike.  

Labour has little choice but to continue austerity measures

Many call for an alternative fiscal approach to managing the deficit. Rather than focusing on cutting the deficit, some advocate for an investment-led growth strategy. This approach would prioritise public infrastructure investment, green investment, and education/skills training. The aim would be to invest heavily to stimulate economic growth. This shifts the focus from short-term deficit reduction to a longer-term economic expansion plan, through which a sustainable fiscal balance can be achieved without deep spending cuts. The major argument against this is that, in the short run, this needs to be financed through taxation or cuts. Again, it is a difficult scale to balance. 

Labour has little choice but to continue austerity measures. The party has previously faced major internal divisions over economic policy, particularly in times of strain. Ed Miliband’s leadership struggled to fully reject austerity, which failed to inspire strong electoral backing. The ensuing backlash is arguably what led to the rise of Jeremy Corbyn, who represented a stronger shift towards anti-austerity policies. Such a position energised parts of the electorate but also deepened Labour’s internal divisions.  

Labour today is keen to avoid such divisions by changing economic policy, learning from Corbyn-era tensions. They also fear strong market reactions – Liz Truss’s government was brought down by market reactions to the mini budget. Labour is therefore keen to navigate a steady course, without too many major policy shifts. They also lack the fiscal headroom for an expansion in spending due to Covid-19 and the subsequent years of inflation, which means it would be very difficult for them to switch to an investment-led approach.  

Overall, austerity in the UK has been an ongoing policy since 2010. The fiscal approach has seen little success, especially due to fluctuations such as Covid-19 and inflationary shocks. Despite this, Labour is set to continue the course, for political and economic reasons. We are likely to see more cuts and the continuation of austerity in the UK.