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Personally I think it's a bit of a stretch to call the LibDem's complicity with the 'austerity' programme a 'mistake'.  Actually the Brown government had reacted to the  crash in exactly the right way to minimise its impact, then along came the Tory/LibDem 'austerity', which many economists pointed out at the time was precisely the opposite of what should have been done. You can't call that 'a mistake' - it wasn't a little slip-up, but deliberately, disastrously, completely wrong-headed.

A better interpretation of events, I'm afraid, is that Osborne and co didn't care,  because they were ideologically fixated on shrinking the state anyway, and that the LibDems simply didn't understand.