In the UK, prior to World War 1, government spending was around 15 % of Gross Domestic Product (GDP). Then, after the war it rose to 25 % of GDP and remained at that level, except for a surge at the start of the depression in the 1930s. After World War 2, public spending returned to a steady 35 % of GDP and this level was maintained through the 1950s. By 1960, state expenditure began a steady rise that peaked in the early 1980s at 45 % of GDP. This period coincided with the highest point of trade union strength and organisation ever achieved by the British working class movement.
During the 1980s public spending declined from 45 % of GDP to 35 % by 1989. But then, with the ERM sterling crisis and associated recession, it rose back to 40 % of GDP before reducing again to 36% in 2000. After 2000, public spending increased rapidly, with a peak of 45.5 % of GDP in 2010 - in the aftermath of the financial crisis of 2008 - followed by reductions to 42.2% (2014-15.)
By way of comparison as a share of national income, German government expenditure was about 15% before World War 1, 25 % during the interwar period, 35% in 1960, 48 % in 1975, and 50% by 1980-81. The German share of government spending rose to well over 50 % during the early 1990s - but Merkel's government's main policy was to drive down public expenditure and Germany now spends 44% of its GDP which is described in leading German economic circles as 'healthy.' The government's share of spending in Sweden, Denmark, the Netherlands, France, Belgium, Austria, Hungary, Italy etc., all showed the roughly same gradual increase in spending as occurred in the UK the 1980s but in modern times they have all reached far higher levels of state expenditure relative to GDP than that of the UK.
In contrast to these European nations, in the most recent period, the United States government expenditure averages 37% and Japan, (before last year’s trillion dollar Quantitative Easing) around 33 % of GDP. (As a matter of interest Japan's QE spending now means that Japan's national debt has risen to 300% of their GDP, 180% higher than the national debt of Greece.)
The point of all this is to give a context to current and previous Tory strategic economic goals since WW2. It is no surprise that by 2020 George Osborne mostly hopes to be Prime Minister but he is also certainly expecting (as a result of his current spending review) for government spending to have reduced to 36% of GDP or less by 2020. Starting from where Thatcher left off, and already with a record of cutting government expenditure by 10% in the course of the worst economic crisis since the 1930s, George has high hopes of triumph on both counts. With a another round of privatisation of state assets including air traffic control, he expects to be leading the final charge towards lean US government spending levels as the new norm and therefore to reach the, thus far, elusive Tory economic Nirvana.
The Institute of Fiscal Studies (27 November) put it this way:
Total government spending (is) due to fall from 40.9% of national income in the last tax year to 36.5% by the end of the decade. As part of that, spending on non-pension benefits (is) being cut to the lowest level in 30 years relative to national income. Also that 'the 3% cumulative increase in health spending over the next five years is not far off the average annual increase in spending in the last 50 years.'
The Institute of Fiscal Studies (27 November) put it this way:
Total government spending (is) due to fall from 40.9% of national income in the last tax year to 36.5% by the end of the decade. As part of that, spending on non-pension benefits (is) being cut to the lowest level in 30 years relative to national income. Also that 'the 3% cumulative increase in health spending over the next five years is not far off the average annual increase in spending in the last 50 years.'
But George has some problems.
First the entrails of his magic trick in the Spending Review are quickly being exposed. Most people interested now know that Universal Credit - less than 2 years away - is going to make nearly 2 million of the poorest people in the UK a lot poorer. Second, stating last July that the cuts in Tax Credits were essential to Britain's successful economic future Osborne reversed himself in November apparently as a result of listening to those Liberal Lords he previously lambasted and threatened with sorting out. Third, Osborne's assumptions rest on the creaky predictions of the Office of Budget Responsibility's figures for government income over the next 5 years. These people have the worst record for predictions since Chamberlain gave the British 'Peace in our Time.'
The real problem for Osborne is of course that there is an entirely new factor in British politics - and it keeps pushing into the previous settled life of the mainstream. Osborne had to retreat because a mass movement, that has so far successfully stopped a Tory PM from bombing Assad's Syria, that most recently occupied the empty Labour Party and set up its new leader, had started the most holy of public rows and public actions about Osborne's latest attacks on the poor. This is the new and nerve racking reality that would-be PM Osborne faces. That there is now a genuine anti-austerity (and anti war) alliance in society, the latter about to be tested once again, that stretches out from the streets, across parties like the Greens and the SNP and now the Labour Party leadership was not expected. These new alliances face a Tory Party that achieved barely 37% of the vote. The real relationship of social forces in British society are beginning to show themselves, and Britain's ancient, corrupt and overweaning political system is feeling the strain. It cannot contain the new person on the bloc.
This weekend Tory grandees are ringing right wing Labour MPs to set up their own alliance - to counter the anti-war movement and sentiment in the country. And so the emergence of two great coalitions is gathering its momentum as British society begins to decide where it stands and starts to polarise on the great issues of War, Wealth and Power. The Tories, leading a (big) section of the Labour MPs on the most critical questions, supported in the county by 9/10ths of the media, the rich, sections of the middle classes, the Generals and the key officers of state; face a new Labour leadership, a growing movement in the streets led by the Peoples Assembly, a range of the more radical parties, most of the unions and the social campaigns and movements and most of the young, in what will be the only fight worth having for the future of Britain.
This is strong stuff and Osborne's petty ambitions are begining to melt away, as the Scots will have it, 'like snow off a dyke.'
First the entrails of his magic trick in the Spending Review are quickly being exposed. Most people interested now know that Universal Credit - less than 2 years away - is going to make nearly 2 million of the poorest people in the UK a lot poorer. Second, stating last July that the cuts in Tax Credits were essential to Britain's successful economic future Osborne reversed himself in November apparently as a result of listening to those Liberal Lords he previously lambasted and threatened with sorting out. Third, Osborne's assumptions rest on the creaky predictions of the Office of Budget Responsibility's figures for government income over the next 5 years. These people have the worst record for predictions since Chamberlain gave the British 'Peace in our Time.'
The real problem for Osborne is of course that there is an entirely new factor in British politics - and it keeps pushing into the previous settled life of the mainstream. Osborne had to retreat because a mass movement, that has so far successfully stopped a Tory PM from bombing Assad's Syria, that most recently occupied the empty Labour Party and set up its new leader, had started the most holy of public rows and public actions about Osborne's latest attacks on the poor. This is the new and nerve racking reality that would-be PM Osborne faces. That there is now a genuine anti-austerity (and anti war) alliance in society, the latter about to be tested once again, that stretches out from the streets, across parties like the Greens and the SNP and now the Labour Party leadership was not expected. These new alliances face a Tory Party that achieved barely 37% of the vote. The real relationship of social forces in British society are beginning to show themselves, and Britain's ancient, corrupt and overweaning political system is feeling the strain. It cannot contain the new person on the bloc.
This weekend Tory grandees are ringing right wing Labour MPs to set up their own alliance - to counter the anti-war movement and sentiment in the country. And so the emergence of two great coalitions is gathering its momentum as British society begins to decide where it stands and starts to polarise on the great issues of War, Wealth and Power. The Tories, leading a (big) section of the Labour MPs on the most critical questions, supported in the county by 9/10ths of the media, the rich, sections of the middle classes, the Generals and the key officers of state; face a new Labour leadership, a growing movement in the streets led by the Peoples Assembly, a range of the more radical parties, most of the unions and the social campaigns and movements and most of the young, in what will be the only fight worth having for the future of Britain.
This is strong stuff and Osborne's petty ambitions are begining to melt away, as the Scots will have it, 'like snow off a dyke.'
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