Student riots, the first taste of the fruits of unbridled austerity

Broken bottles, burning banners, protesters brandishing copies of Socialist Worker shouting "Tory scum" and squaring up to baton-wielding police outside Conservative Party headquarters. This may sound like a scene from Channel 4's This Is England '86, but the unrest that accompanied the student protests in London last week was no Thatcher-era throwback. Across the UK, discontent on campus is rising to levels not seen for decades.

The sheer number - the National Union of Students estimates more than 50,000 - that took part in demonstrations against increases in tuition fees and reductions in university budgets of up to 40 per cent shows the depth of anti-cuts feeling among students. Many travelled long distances from places such as Sheffield and Edinburgh to participate.

The vast majority were peaceful and dignified. That some protesters turned violent should not detract from the fact that many students feel so angry and powerless that they are marching en masse on British streets for the first time in a generation. Indeed, conditions are ripe for sustained student unrest in the coming months.

For a hint of what may come, look to the Republic of Ireland. It is hardly a hotbed of student radicalism, but at the start of this month, 25,000 took to the streets to protest against a proposed hike in university registration fees. Demonstrations in Dublin turned nasty, with clashes between the police and a handful of protesters. Student leaders quickly condemned the violence, but, as in Britain, this rioting needs to be viewed as a symptom of a deeper malaise.

On both sides of the Irish Sea, governments have pursued austere deficit-reduction policies. Indeed, Chancellor George Osborne, who in 2006 called Ireland "a shining example of the art of what is possible", has modelled the coalition's cuts strategy on measures introduced by Dublin after the banking crisis.

In Ireland, budgets have been squeezed so tightly that there is barely a euro's worth of savings to be wrung from the public sector. Education, alongside almost every other government department, has had its spending slashed, to the detriment of many Irish universities. Despite the republic possessing one of the most highly educated workforces in the world, unemployment stubbornly remains above 12 per cent. Last year, 40,000 people left the country, many of them graduates. More than 100,000 are expected to join them next year.

Young Irish men and women wishing to pursue third-level education now face three near certainties: debt, unemployment and emigration. Demonstrators took to the streets of London out of a justifiable fear that the coalition's policies will leave UK students in a similarly daunting position. Reductions in third-level spending proposed by the Browne Review and endorsed by Westminster cannot be viewed in isolation. They are part of a much wider, Conservative-led policy of cutting public spending and shrinking the state.

Why is the coalition carrying out such savage cuts? Osborne's answer is that if the country's vertiginous budget deficit is not brought down to earth quickly, international bond markets will lose faith in the government's ability to pay back its loans, leading interest rates on our borrowing to rocket and threatening Britain with bankruptcy.

This analysis is deeply flawed. Much of our government debt is in the form of long-term loans that do not need to be repaid quickly. Furthermore, bond markets do not reward reckless deficit-cutting, which radically erodes tax bases and leaves gaping holes in tax receipts. Indeed, at almost the exact moment that protesters entered Millbank Tower, the yield on Irish bonds hit a record high of 8.62 per cent: cuts have shrunk Ireland's economy so drastically that markets doubt the country's ability to produce sufficient tax revenue to service its debts. This could happen here.

Students are not alone in opposing Westminster's austerity drive. No less than David Blanchflower, a member of the Bank of England's Monetary Policy Committee until 2009, described the Comprehensive Spending Review as "unnecessary, misguided, doctrinaire". Across the pond, Paul Krugman warned that "the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump." Krugman, winner of the 2008 Nobel Prize for Economics, believes the coalition must increase public spending to restore full employment and dispel fears of a double-dip recession.

The Liberal Democrats may argue that changes in education funding will leave the poorest better off, but whatever the merits of their case, unless there is radical change in the government's overall economic strategy, this will not be the last time we see students rioting on our streets. This is Britain, 2010.