Government spending

This presentation was given by Carl Emmerson at the IFS public economics lectures, held in London on 7 January 2016

The onset of the global financial crisis was quickly followed by a substantial increase in government borrowing in many European countries. To offset this, packages of tax rises and spending cuts were implemented in many countries. The approaches taken have shown similarities but also important differences – in terms of the reliance on tax rises versus spending cuts, which areas were cut, and the types of households affected. A new special edition of the journal Fiscal Studies, launched today at an event in Brussels, looks at the impact of the Great Recession on the public finances and the fiscal policy reforms implemented in France, Germany, Ireland, Italy, Spain and the United Kingdom.

Presented at the IFS Post-Spending Review/Autumn Statement Analysis on 26 November, 2015.

As George Osborne prepares for next week’s combined Autumn Statement and Spending Review announcement, figures released today by the Office for National Statistics suggest that he is on course to slightly overshoot the latest official forecast for borrowing this year of £69.5 billion. To meet his plan to cut borrowing thereafter and achieve a surplus by 2019–20, Mr Osborne faces two big challenges next week. The first is to divide up the shrinking budget for day-to-day spending by departments, while continuing to protect many areas of spending. The second is to remain within his welfare cap while taking on board the recent House of Lords motion that he must reconsider the tax credit cuts he announced in July.

Public spending on the police was cut by 14% in real terms between 2010–11 and 2014–15. This Observation article, which summarises the main findings of new IFS research, places these spending cuts in the context of the large spending increases over the 2000s, and explores the differences between police forces in how they fared over these two periods.

With the Bank of England setting interest rates and the Office for Budgetary Responsibility providing forecasts to help guide the public finances, Paul Johnson in The Times asks if there are other areas where independent bodies could improve economic governance by restraining the role of politicians.

Carl Emmerson sheds light on the practical implications of the public spending cuts announced in the July 2015 Budget in this piece, published in the Summer 2015 issue of Public Service Magazine.

Last week’s Budget was the first of the new Parliament and the first by a Conservative government for nearly two decades. Following the pattern of all other general elections since 1987, the government announced a package of tax measures raising in excess of £5 billion a year. But there were also significant changes to public spending – with new cuts to social security spending but a reduction in the planned cuts to spending on public services. Overall the effect of the measures announced last week was to slow the pace of fiscal consolidation over the next three years but to increase the size of the eventual medium-term tightening.