Austerity Has Diminished Britain—and Cameron, Too

Austerity will be the rude gate-crasher in Lough Erne, Northern Ireland, when British Prime Minister David Cameron hosts the leaders of the Group of Eight nations at a June 17-18 summit meeting. The austerity formula—cut spending, and growth will follow—by and large isn’t working. The big economies of continental Europe are shrinking or barely growing. Britain’s economy has expanded less than 1 percent over the past year. In the U.S., the chill of sequestration spending cuts is expected to reduce annual growth to 1.6 percent in the current quarter.

Cameron’s agenda for the Lough Erne summit isn’t austerity but trade, tax compliance, and transparency. He doesn’t appear to want a freewheeling discussion among world leaders about the downsides of austerity, a policy with which his political career is inextricably linked. In a paean to the late Prime Minister Margaret Thatcher in April, he said she rejected defeatism and “made the political weather.” That’s Cameron’s ambition as well—to set the agenda, not have it set for him.