http://haroldchorneypoliticaleconomist.blogspot.com/2010/10/uk-national-debt-no-crisis.html
The United Kingdom Coalition government has delivered its budget statement detailing its proposed cuts in government expenditures over the next five years. The summary of these cuts is detailed below. The final figure on each line shows the percentage reduction in the real expenditure budget for the category shown at the end of five years.
An excerpt from the British government's new austerity budget announced on Oct. 20, 2010. (courtesy of HM Treasury, the United Kingdom)
The United Kingdom Coalition government has delivered its budget statement detailing its proposed cuts in government expenditures over the next five years. The summary of these cuts is detailed below. The final figure on each line shows the percentage reduction in the real expenditure budget for the category shown at the end of five years.
An excerpt from the British government's new austerity budget announced on Oct. 20, 2010. (courtesy of HM Treasury, the United Kingdom)
Total U.K.government program and administrative expenditures
£ billion Per cent
Baseline2
2010-11, 2011-12, 2012-13, 2013-14, 2014-15
Departmental Programme and Administration Budgets
Education3 50.8 51.2 52.1 52.9 53.9 -3.4
NHS (Health) 98.7 101.5 104.0 106.9 109.8 1.3
Transport 5.1 5.3 5.0 5.0 4.4 -21
CLG Communities4 2.2 2.0 1.7 1.6 1.2 -51
CLG Local Government 5 28.5 26.1 24.4 24.2 22.9 -27
Business, Innovation and Skills 16.7 16.5 15.6 14.7 13.7 -25
Home Office6 9.3 8.9 8.5 8.1 7.8 -23
Justice 8.3 8.1 7.7 7.4 7.0 -23
Law Officers' Departments 0.7 0.6 0.6 0.6 0.6 -24
Defence 24.3 24.9 25.2 24.9 24.7 -7.5
Foreign and Commonwealth Office 1.4 1.5 1.5 1.4 1.2 -24
International Development 6.3 6.7 7.2 9.4 9.4 37
Energy and Climate Change 1.2 1.5 1.4 1.3 1.0 -18
Environment, Food and Rural Affairs 2.3 2.2 2.1 2.0 1.8 -29
Culture, Media and Sport7 1.4 1.4 1.3 1.2 1.1 -24
Olympics8 - 0.1 0.6 0.0 - -
Work and Pensions 6.8 7.6 7.4 7.4 7.6 2.3
Scotland9 24.8 24.8 25.1 25.3 25.4 -6.8
Wales9 13.3 13.3 13.3 13.5 13.5 -7.5
Northern Ireland9 9.3 9.4 9.4 9.5 9.5 -6.9
HM Revenue and Customs 3.5 3.5 3.4 3.4 3.2 -15
HM Treasury 0.2 0.2 0.2 0.2 0.1 -33
Cabinet Office10 0.3 0.4 0.3 0.2 0.4 28
Single Intelligence Account 11 1.7 1.7 1.7 1.7 1.8 -7.3
Small and Independent Bodies12 1.8 1.8 1.6 1.5 1.4 -27
Reserve 2.0 2.3 2.4 2.5 2.5 -
Special Reserve 3.4 3.2 3.1 3.0 2.8 -
Green Investment Bank - - - 1.0 - -
Total 326.6 326.7 326.9 330.9 328.9 -8.3
memo:
Central government contributions to local
government13 29.7 27.5 26.3 25.5 24.2 -26
Local Government Spending14 51.8 49.8 49.5 49.5 49.1 -14
Central government contributions to police 9.7 9.3 8.8 8.7 8.5 -20
Police Spending (including precept) 12.9 12.6 12.2 12.1 12.1 -14
Regional Growth Fund - 0.5 0.5 0.4 - -
1 Depreciation in Resource DEL is drawn from departmental resource accounts and follows International Financial Reporting Standards. This
currently differs from National Accounts depreciation, which is used in the calculation of PSCE by the Office for National Statistics.
2 As at all spending reviews, baselines exclude one-off and time-limited expenditure and therefore may not sum to 2010-11 total. Cumulative real
growth is calculated using the 2010-11 baseline.
3 Includes the Office of the Qualifications and Examinations Regulator
4 If grants moving to local government are included then CLG Communities growth is -33%
5 LG DEL includes funding for police and fire authorities. Excluding these contributions LG DEL for councils will fall by 28%
6 If contributions to police are excluded then the Home Office growth is -30%
7 The DCMS baseline excludes £85m of broadcasting funding, which the BBC will fund from 2013-14.
8 Olympics is included in DCMS DEL.
9 The Government agreed that as part of the £6.2bn cuts to 2010-11 budgets the Devolved Administrations could defer their cuts to 2011-12.
10 Includes one-off funding in 2014-15 for Individual Electoral Registration (£85m) and the costs of the 2014 election to the European Parliament
(£120m). Excluding these, the core Cabinet Office settlement will be cut by 35%.
11 Includes SIA contribution to National Cyber Security Programme
12 A more detailed breakdown of small and independent bodies' is set out in Table A12
13 Values and profile based on indicative allocations from departments.
14 Includes the OBR's forecast for growth in council tax receipts
My Analysis:
As far as I can tell from a quick read of the Treasury documents they contain no detailed analysis of the macro-economic impact of these planned cuts. But given that they amount to some 81 billion pounds over the next five years and directly affect close to half a million workers who will see their jobs eliminated in the public sector it is highly probable the impact will be quite contractionary. Annual public expenditures in the UK are currently at the level of 696.8 billion pounds rising to a projected 739.8 billion pounds in five years.So cutting 81 billion by the end of five years is a 12% reduction from the current level of spending. Interest rates are already very low so aside from further QE there is not much room available for stimulus on the monetary side. There may well be some employment improvement as a result of stimulus already delivered but this will be diminished by the net negative impact of these austerity measures. According to the British Institute for Fiscal Studies this program spending review delivers the largest cuts in government spending since 1945. Hardly a desirable attribute in view of the severity of the crash and subsequent slump. In addition the Institute argues that the measures will hit the lowest quintile of income earners hardest. The government has attacked this interpretation as misleading but there is no doubt that poor people are major losers as a result of these cuts.
As far as I can tell from a quick read of the Treasury documents they contain no detailed analysis of the macro-economic impact of these planned cuts. But given that they amount to some 81 billion pounds over the next five years and directly affect close to half a million workers who will see their jobs eliminated in the public sector it is highly probable the impact will be quite contractionary. Annual public expenditures in the UK are currently at the level of 696.8 billion pounds rising to a projected 739.8 billion pounds in five years.So cutting 81 billion by the end of five years is a 12% reduction from the current level of spending. Interest rates are already very low so aside from further QE there is not much room available for stimulus on the monetary side. There may well be some employment improvement as a result of stimulus already delivered but this will be diminished by the net negative impact of these austerity measures. According to the British Institute for Fiscal Studies this program spending review delivers the largest cuts in government spending since 1945. Hardly a desirable attribute in view of the severity of the crash and subsequent slump. In addition the Institute argues that the measures will hit the lowest quintile of income earners hardest. The government has attacked this interpretation as misleading but there is no doubt that poor people are major losers as a result of these cuts.
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