Tuesday, 22 June 2010

Spend, spend, spend!

A couple of weeks ago, I wondered if the government would really cut public spending.

Well, we now have the budget. And according to the Telegraph's report on the budget,
-Government spending will be £637bn in 2010/11
-Government spending will be £711bn in 2015/16
That compares with an estimate for £631 bn for 2009/10, and an actual figure of £575 bn for 2008/09 (according to UK Public Spending).

So it looks like overall public spending is not going to be cut (though the budgets of several departments and programmes, of course will). Spending will rise in 2010/11 by 0.95% over the previous year, and by an average of 2.2% a year over the next 5 years.

Of course, inflation (CPI) is currently running at 3.4%, so if that rate continues and if public spending actually does turn out to be what the government intends, then, in real terms, public spending will be cut - though not exactly drastically. But I'm not sure whether or not government spending projections take inflation into account.

Edit: Thanks to Burning Our Money, this handy graph explains all. I think.

Edit 2: The Wall Street Journal says "In real terms spending is actually projected to carry on going up—from £637 billion in 2010-11 to £711 billion in 2015-16—but that still represents the biggest squeeze since World War II."

Real terms? That is simply amazing.

(Thanks to Tim Worstall, who also appears to be surprised.)

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