Like the Laffer Curve it suggests that there is a point at which cutting government spending becomes self-defeating, it simply lowers growth, depresses tax revenues and pushes up social security spending by more than the government is cutting.

The question for policy-makers then, is are they past the point and at which the curve becomes downwards sloping? Will more austerity simply lead to higher deficits?

Judging by the tone of S&P’s downgrade of several European sovereigns last week, it certainly seems to think that many countries have passed this point.

Duncan Weldon from the TUC Touchstone blog raises an interesting point about Europe's austerity measures. But I wonder, as raised by commenter Migeru, whether this is just fighting pseudoscience with pseudoscience.