The conservative theories about starving public spending as a way to jump-start private investment have been proven completely wrong by this test case. Austerity during a fragile recovery is destroying Britain. As Brad DeLong writes, if there’s any country where this myth of expansionary austerity should have worked, it was Britain. But it’s not working at all.

After all their self-defeating austerity efforts, a few European economic policy makers are noticing that they’re having a problem with growth. The UK and other economies are falling back into recession; Greece is in a depression. But they still haven’t acknowledged they’ve got the solutions backwards.

“I thought British policy was to make the world England.” So said the fictional Major Duncan Hayward in the Hollywood version of Last of the Mohicans.  Major Hayward was appalled when his superior officer granted concessions to the independent colonials as a condition for getting the nascent Americans to help the British Army fight the [...]

The Eurozone deal laid bare the fact that national sovereignty in Europe is a thing of the past.

But if that was that price paid for a stronger Europe, a safe currency union and a stronger economy, maybe we could have a reasonable argument about the costs and benefits. But the countries on the periphery, like Italy, Spain, Portugal and Greece, who gave up the ability for their governments to make decisions in the interests of the people they represent, in favor of unelected bureaucrats led by the nose of the markets, don’t even get the exchange of greater economic opportunity.

The 17 countries of the Eurozone formally backed a new deal for fiscal management, one designed to “save the euro” but which can only help if a host of other measures fall into place, including any plan to actually boost growth on the southern periphery.

Earlier in the week, I wrote about how David Cameron wanted to use his leverage as a non-Eurozone member of the EU to wring concessions as a condition of signing treaty changes. At the EU summit, he presented his aims: basically, softening a financial transaction tax that the other countries in Europe want, and other policies that protect British banks. Because you need all 27 members of the EU on board with the preferred fiscal policies that really only affect the 17 countries in the Eurozone, Cameron thought he had the power to hold out. So Cameron vetoed the revisions to the Treaty of Lisbon. And then the Eurozone leadership, essentially France and Germany, went around Britain and negotiated a bunch of Eurozone side deals.

The Merkozy preferred plan for tighter fiscal Euro consolidation, with sanctions for member nations that fail to reach budget targets, requires a change to the Treaty of Lisbon, which covers not just the 17 countries in the Eurozone, but all 27 member countries in the EU. If that route is pursued, any country that vetoes the treaty change would effectively block it. And that brings Britain into the picture.

As many as two million public sector workers are on strike against austerity and slashing pensions in Britain today. This is the biggest strike in Britain in 30 years, when the protests focused on another purveyor of austerity, Margaret Thatcher.

we have more evidence today of how crippling austerity measures can be for an economy trying to come out of a deep recession. Unemployment in Great Britain is now the highest in 17 years.

Like America, European nations have been pursuing spending cuts and other austerity that lead to declining GDP growth numbers and fears of a double dip recession. Europe embraced austerity more quickly than did the US, and it’s predictably depressing, so the expected results are occurring: Britain, which ushered in a mass austerity program, is paying the price with zero growth and may now be reconsidering whether to pursue at least some monetary stimulus.