UK Government spending – real and as % of GDP

uk-public-spending-share-of-gdp-june-2022-crop

uk-government-spending-98-22

Source: ONS MF6U

UK government spending passed over £1 trillion in 2020 due to the extra spending measures of the Covid Pandemic.

Total spending compared to Nominal GDP

total-government-spending-psr-gov-uk

Source: HMT public spending statistics (May 2022)

The rise in spending 2020-21, also combined with a fall in GDP

UK Public spending as % of GDP

https://www.gov.uk/government/statistics/public-spending-statistics-release-may-2022/public-spending-statistics-may-2022

Source: OBR (April 2022)

In 2000-01, several years of government spending restraint combined with rising economic growth, saw government spending shrink to under 35% of GDP. Between 2001 and 2007-08, spending rose to over 40% of GDP due to sustained increases in spending on health, education and welfare spending.

In 2007/08 the financial crisis and subsequent recession led to higher spending as ratio of GDP – even though the new Conservative government pursued austerity and sought to cut government spending or limit spending in many areas.

Real term trends in public spending

spending-by-dept-psr-gov-uk

Health care has been the biggest source of growth since 2010. Social protection, which includes pensions has been flatter since 2010 because of low real income increases in welfare benefits.

Source HMT Public spending statistics (May 2022)   UK Pension spending

More details on pension spending.

Government borrowing

uk-net-borrowing-55-22-marks

This shows recent government borrowing. As expected in a recession, borrowing peaks.

Background to government spending

  • Between 2008-09 and 2009-10, the UK saw a large drop in real GDP of 6%, but due to automatic stabilisers government spending increased (e.g. higher unemployment benefits). This caused government spending as % of GDP to rise to 47%.
  • Government spending as % of GDP is forecast to fall closer to 40% of GDP by 2016-17 (if growth targets are met)

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Health care spending in the UK

health care spending % GDP

Since 1950, health care spending in the UK has increased dramatically in real terms (adjusted for inflation). In the post-war period, we have also seen a sharp rise in public health care spending as a % of GDP (from 3% in 1960 to 7.8% in 2010). This matches a global rise in health care spending. …

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Is austerity necessary?

uk-national-debt

Since 2010, the UK economy has been dominated by spending cuts and the desire to run a budget surplus as soon as possible. In the political world, the government deficit is often portrayed as the source of many economic ills and eliminating the deficit one of the highest macro objectives. However the government deficit (see: …

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How is government spending rising at a time of spending cuts?

Readers Question: Why are there government spending cuts at a time of rising government spending? One of the confusing elements of ‘austerity’ and government spending cuts is that from one perspective, we can have a rise in total government spending – but some areas of government spending see cuts. Source: ONS Public Sector Finances MF6U …

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