evaluations based on business surveys overlaid by ad hoc aggregation and adjustments (the method used by the UK Treasury and OBR). Critics of these calculations have suggested that the output gap is much larger, and therefore the structural deficit much smaller, than the official view. This challenges the supposed need for yet more austerity.

Nevertheless, an argument based solely on the irrationality of economic measurements is by no means a sufficient basis for developing an effective critique of the Fiscal Pact. Nor indeed has it proved effective to campaign against austerity as such, because the present-day public ‘common sense’ remains resolutely pre-Keynesian. For this reason, it is important to strengthen the case against the Pact by exposing the anti-democratic character of the proposed use of the structural deficit as a policy target, which continues the long-term neoliberal strategy of ‘depoliticising’ macroeconomic policy-making.

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