US to UK: May I follow you over that cliff? Here’s Louis Woodhill with the numbers:
The new British fiscal plan was very similar to the “grand bargain” being advocated by the Obama administration. It supposedly consisted of 77% spending cuts and 23% revenue increases. However, some crucial tax rates were increased, including a hike in the top marginal capital gains tax rate from 18% to 28%.
The tax increases derailed England’s economic recovery. GDP growth over the next three calendar quarters averaged only 0.77%. This was 70% lower than the growth rate during the 9 months prior to the tax hikes. The percentage of British adults with jobs, which had been rising, plummeted after the tax increases. It has since stabilized at a lower level.
Bad luck, I suppose.