The fiscal contraction brought about by the Conservative-led coalition government starting 2010 was sizable: aggregate real government spending on welfare and social protection decreased by around 16% per capita. At the district-level, which administer most welfare programs, spending per person fell by 23.4% in real terms between 2010 and 2015, varying dramatically across districts, ranging from 46.3% to 6.2% with the sharpest cuts in the poorest areas. Using data from government estimates on the simulated intensity of specific welfare cuts across districts, I show that support for Ukip started to grow in areas with significant exposure to specific benefit cuts, after these became effective ...
The austerity-induced increase in support for Ukip is sizable and suggests that the tight 2016 EU referendum result (leave won by a margin of 3.5 percentage points) could have well resulted in a victory for remain, had it not been for austerity. The point estimates suggest that in districts that received the average austerity shock, Ukip vote shares were, on average, 3.58 percentage points higher in the 2014 European elections or even 11.62 percentage points higher in the most recent local elections prior to the referendum. Due to the tight link between Ukip vote shares and an area’s support for leave, simple back of the envelope calculations suggest that leave support in 2016 could have been up to 9.51 percentage points lower and thus, could have swung the referendum in favour of remain.