UK spending cuts are less severe than Euro average

Julian Harris
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GEORGE Osborne’s initial government spending cuts are even less severe than average austerity measures across the Eurozone, a leading think tank will say today.

UK public spending will slow by 2.2 per cent of GDP from 2010 to 2012, according to the Centre for Economic and Business Research (CEBR) – below the Euro area average of 2.4 per cent reductions.

And the UK will remain in the top ten countries for the size of government spending as a proportion of GDP, in a comparison of 31 peer nations.

Spending is expected to measure 45.9 per cent of GDP by the end of 2011-12, down from 49.3 per cent in Labour’s final fiscal year in office. In 2000-01, spending was 39.6 per cent as a share of GDP.

“By 2012, the UK is forecasted to have the ninth highest share of public spending,” the CEBR’s report says.

“The UK moved from having the 25th highest public expenditure share of GDP in 2000 to the 10th highest in 2010, out of 31 countries.”

Scotland, Wales and Northern Ireland each have public expenditure above 50 per cent of their GDP, a situation replicated in four English regions – the north east, north west, Yorkshire and the Humber and the west midlands.

Even after the coalition government’s proposed cuts over the course of this parliament, spending as a proportion as a percentage of GDP will remain above 50 per cent in the north west (50.8 per cent), the north east (at 55.7 per cent), Northern Ireland (58.8 per cent) and Wales (59.2 per cent).

In London, spending will total one third of GDP by 2011-12, and 31.4 per cent by the end of parliament – lower than every other UK region.

The south east (excluding London) will be the only other region with public spending of less than 40 per cent of GDP by the end of the current parliamentary term; spending is expected to be the equivalent of 36.4 per cent by 2014-15.

● In 2000 the UK had the 25th highest government expenditure, as a share of GDP, in a comparison of 31 countries. By 2010, the UK was 10th highest.

● “Although much attention has been devoted to the ‘cuts’ in the UK, the planned reduction in public expenditure between 2010 and 2012 is actually slightly lower than the average for Euro area countries” -- CEBR report.

● Government spending as a share of GDP hit 49.3 per cent in 2009-10, yet eased slightly to 47.9 per cent in the last fiscal year. It is hoped to fall to 43.2 per cent by 2014-15.

● Government spending as a share of GDP rose by 11.1 per cent between 2000 and 2010 – quicker than any other member state of the Organisation of Economic Co-operation and Development (OECD) apart from Ireland.