Is there REALLY a consensus on Austerity?

With a news schedule this busy, it's easy to miss the wider picture. With our screens full of conflict in the Middle East, disaster in Japan, marches in London and cuts that need to be opposed, it's easy to forget that the world must still turn and that we need a coherent strategy to ensure that it does.

During the credit crunch there was a broad consensus. The only way out of the financial meltdown, the only way to avoid a worldwide depression was through stimulus. Across Europe and America, governments stepped in to support ailing industries, protect home owners from repossession, bail out the banks and keep interest rates low.

With the formation of the UK coalition and the debt crisis raging, Europe largely abandoned this Keynesian approach and raced to announce austerity packages. Anglea Merkel and Geroge Osborne took the lead and first Greece, then Ireland, then Spain and Portugal, started cutting their way out of debt.

Since then, growth projections have fallen, unemployment has risen and both Ireland and now Portugal have been forced into taking bailouts from the European bank. Bonds have soared - exactly the effect austerity measures are supposed to avoid.

Over the last few days however, there are signs that this consensus of austerity is falling apart. The Portuguese Prime Minister, Jose Socrates, resigned on 23rd March stating that

“I know what this (EU bail out) meant for Ireland and Greece, and I don’t wish it on my country,” he said. “Portugal must demonstrate that it is a country that can resolve its own problems.”

Mr Sarkozy just faced a damning vote in local elections, receiving just 20% of the vote with the opposition Socialist Party receiving 36% on the lowest turnout ever in this kind of vote.

Angela Merkel, the Queen of austerity, suffered an historic defeat in state elections, beat by the Green Party over a debate raging on nuclear power.

Finally, in perhaps the most damning blow to right wing economics of all, the Canadian government, held up by our own coalition as a blueprint for austerity measures and deficit reduction, were toppled over the weekend in a vote of no confidence. The charge?

"failing to disclose the full financial details of its tougher crime legislation, corporate tax cuts and plans to buy stealth fighter jets."

So effectively taking the route our own coalition are so fond of - saying one thing but doing entirely another.

Worryingly, these defeats saw the National Front (under the charismatic Le Pen) surge in popularity in France, winning 11% of the vote, while our own BNP and EDL also claim a foothold in the public psyche.

So, a series of news stories, add up to a narrative which must make very uncomfortable reading for centre-right governments around the world : You can cut all you like, you can sit back as unemployment rises, as growth falls, as inflation soars, but you need the people with you. In democracies, the people have the final say, even if it doesn't always feel that way.

With local elections looming here in the UK in May, it is likely that the Lib Dems will face collapse. But what of Gloucester and Surrey and Berkshire? Will they reject the Conservatives as soundly as Merkel was rejected in a state her party had held for almost 6 decades?

People may say that local elections don't matter. That by-elections don't matter. That up to half a million people marching peacefully in London don't matter, but Cameron and Clegg know very well that in the end,
they start to matter very much.