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Fiscal Policy and Political Ideology : Did Austerity Reshape Britain’s Political Landscape?

Author

Listed:
  • Lester, Cian

    (University of Warwick)

Abstract

This paper investigates whether austerity-induced welfare cuts contributed to a shift in political ideology in the United Kingdom during the 2010s. Combining welfare reform data with general election outcomes and survey-based ideological positioning, the study constructs a Right-Wing Index to capture temporal and spatial variation in rightwing political sentiment. Using a Multi-Way Fixed Effects Difference-in-Difference approach, the analysis estimates the impact of austerity on right-wing ideology. The paper contributes to political economy literature by incorporating updated 2020/21 austerity estimates and a broader ideological framework beyond party vote shares alone. Overall, the findings suggest that austerity shaped British political ideology in complex, time-dependent ways. In the short term, it reduced support for the right through electoral backlash, but may have caused longer-term shifts toward right-wing populism as economic hardship deepened.

Suggested Citation

  • Lester, Cian, 2025. "Fiscal Policy and Political Ideology : Did Austerity Reshape Britain’s Political Landscape?," Warwick-Monash Economics Student Papers 88, Warwick Monash Economics Student Papers.
    • Handle: RePEc:wrk:wrkesp:88
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/wmesp/manage/88_-_lester.pdf
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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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