Does fiscal austerity strengthen UKIP?

GraphSpendingUKIP

In their manifesto published yesterday, the Conservative party have pledged to increase funding for the NHS by 8bn a year, besides other policies that have been criticized for for not being clearly funded. Many observers have argued that all these spending increases will need to be be compensated somehow by deep cuts in other domains, such as the welfare budget, where 12bn are to be cut by 2017-2018. In this respect, the Conservative party will be continuing the policy of reductions in public spending which some believe will lead to levels unseen since the 1930s. Now another thing that the Conservatives want, it’s to prevent the rise of UKIP. Can these two things be reconciled? In the graph above, I have plotted together public spending per capita in 2012-2013 (from here) and UKIP voting intentions from the British Election Study. There is a surprising level of fit (72% of the variance explained), and the clearly negative relationship holds if we control for unemployment (data here: UKIPSpending). The less public spending there is, the more UKIP support there is. Basically, if one were to assume that this relationships was causal, it would “cost” 200 pounds of increased spending per capita to reduce the UKIP vote by 1%. I am not sure whether this fits in the long term economic plan.

3 thoughts on “Does fiscal austerity strengthen UKIP?

  1. Tom Tom

    This is a very interesting observation. However, we could interpret the correlation the other way round. UKIP voters are against tax and public spending in general. Politicians, from whatever party, living in an area were a large proportion of the voters are against public spending, will tend to limit investments and social measures. In one way, that would be comforting as it would mean that democracy works (and therefore that maybe this is not such a good system, but that’s another debate🙂.

    My other remark would be on austerity. David Cameron is speaking up and loud on austerity, but in practice, this is hard to detect in the figures:

    Public deficit as a % of GDP
    UK France Italy
    2009 -10,8 -7.2 -5.3

    2010 -9,6 -6.8 -4.2

    2011 -7,6 -5.1 -3.5

    2012 -8,3 -4.9 -3.0

    2013 -5,8 -4.1 -2.8

    It would be interesting to study this in further details, because this to me doesn’t look very much like austerity

    Reply
    1. alexandre afonso Post author

      Thanks. However, there is no evidence that UKIP voters actually want less public spending, quite the opposite: https://twitter.com/alexandreafonso/status/583021545511088129

      Regarding the deficit: this is an argument I’ve heard often, but it is misleading because public spending and deficit are not the same thing. You can cut public spending drastically and still have a rising deficit because of declining revenues: if the state cuts spending when the private sector cuts investment, the economy shrinks, tax revenues decline and the deficit increases. This is precisely what has happened in Southern Europe post-Troika.

      Reply
      1. Tom Tom

        Well I don’t agree with you. If you look at their “program” ok UKIP, they want to reduce income tax and remove inheritance tax (lower revenue for the state) and reduce spending (scrap ecology, culture and rail investments), remove redistribution from England (scrap Barnett formula), limit child benefit to 2 children, and introduce a benefit cap, etc…. This looks perfectly in line with other populist party, such as UDC/SVP in Switzerland, which tend to be against public spending in general (even though the electorate is mostly among beneficiary of public spendings!).

        As for the deficit, the thing is that for Spain and Greece, the GDP did go down for several years, whereas for the UK, the GDP went up in the last 5 years. If we take a base 100 for the GDP for all countries in 2006, and applies the real gdp growth and calculate the deficit as a percentage, then the cumulated deficit of the UK from 2010 to 2013, is the 24th worst out of 27 countries for which I have the data from Eurostat (in order of increasing deficit the countries are: Norway, Estonia, Luxembourg, Sweden, Germany, Bulgaria, Finland, Danemark, Austria, Latvia, Italy, Czech republic, Malta, Hungary, Belgium, Netherlands, Romania, Slovakia, Cyprus, France, Croatia, Portugal, Slovenia, United Kingdom, Greece, Spain, Ireland)… This means that if there was a reduction in public spending then there was a bigger reduction in state revenue

        This said, it is true that total government spending as % of GDP but also in absolute value (taking into account inflation tho’) did decrease in the UK (well it decreased a lot in 2011, increased quite a bit in 2012 and reduced slightly in 2013 to end up about1,5% lower than in 2010, but way higher than 2008 and before (inflation taken into account). It would be interesting to study this further, especially excluding unemployment spendings….

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