Paul Krugman attacks 'mad' austerity policies in Britain Mr Krugman said that there was a "clear and present risk" that George Osborne's austerity policies would damage Britain's future. "The shadow won't just be cast on the present, but on the longer term," he said. [Britain] will be a weaker economy ten years or even 15 years from now because [it has] failed to provide adequate demand now. However, Jonathan Portes, director of the National Institute of Economic and Social Research (NIESR) said that although austerity measures had reduced the deficit in the short term, the "scarring effect" of Britain's cuts would "make the long run [effects] much worse." Mr Krugman also said that the argument that a borrowing increase would cause a spike in interest rates was wrong.