Britain’s new prime minister faced two tests when he formed his first government this spring, and surprised the country both times. The margin of Cameron’s victory in May’s general election was too small to let the Tories rule alone. Instead of offering the Liberal Democrats a limited voting pact on specific proposals, he offered seats in the cabinet and invited them into a full and, he hopes, lasting coalition. It is bound to be a turbulent marriage, since few Lib Dems are comfortable with the partnership, but it might be a fruitful one, and while it lasts, it will entirely recast British politics.
The new coalition’s most pressing challenge was economic policy, and again Cameron was brave. Rather than waiting for financial markets to dictate the terms of the country’s needed fiscal correction, the coalition announced tax increases and spending cuts at the high end of what was feasible, kicking in faster than many economists think wise. Cameron is reducing public borrowing by 9 percent of GDP in five years. Few other over-borrowed countries are tightening as severely, and those that are, unlike Britain, typically have no choice. The spending cuts will lop off a full quarter of some department budgets. Once the consequences start to be felt, resistance in the country will rise, and the pressure on the coalition will no doubt increase. On fiscal policy, as on the terms of the partnership with the Lib Dems, Cameron may turn out to have erred, but you have to respect his taste for the unexpected.
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