It depends upon what your definition of austerity is

Apparently we can’t have tax cuts because that would be to continue austerity. This rather depending upon what our definition of austerity is:

Boris Johnson’s plans to slash taxes for high earners is likely to cost more than £20bn and will make it “almost impossible” to end austerity, according to a leading economic think tank.

The assessment of the Conservative leadership frontrunner’s tax cuts comes after his party pledge to end austerity last year.

The Institute for Fiscal Studies believe the pledges will cost “north of £20bn”, its head, Paul Johnson told The Telegraph.

“There’s £15bn of headroom in which to spend while keeping [public] debt on a downward trajectory,” said the IFS chief. “In a world where you don’t want debt to rise and introduce a £20bn tax cut it's almost impossible to end austerity.”

The definition being used here is not a reasonable or workable one. A return to the rough fiscal balance we had under Gordon Brown’s Chancellorship Terror is something we really shouldn’t be describing as austere. At the time we were all remarking upon how his spending imitated that traditional inebriated matelot.

The basic facts are that the tax burden, at 34 and a bit percent of GDP, is at an historically high level. Spending as a portion of GDP is still higher than it was before the Crash. This is not austerity.

We’re not greatly taken with that basic Keynesian settlement, that public spending should blow out in harsh times. One reason being that, as things turn out, that stimulatory flashing of other peoples’ cash becomes seen as the new baseline. Any attempt to return to a more reasonable settlement, where individuals decide on the disposal of, say, the results of two thirds of their own labour becomes those harsh cuts to government.

Which is indeed exactly what we’re seeing here now. The actual Keynesian ideal is that we do have that expansion in those harsh times, then we withdraw it all in more normal. For to fail to do that would be to create a ratchet whereby government as a portion of everything continually jerks up over the inevitabilities of the continued business cycle. This is exactly the - wrong - definition that the IFS is using of austerity here. Now that we’re out of the woods is when we should be returning to that status quo ante, and doing so isn’t austerity. It’s simply good fiscal management.