BusinessCompany NewsLies, damn lies and statistics …

Lies, damn lies and statistics ...

Back in the summer, prime minister Blair made some comments regarding UK public spending. Specifically, he was quoted as saying that UK public spending has been too low, not just under Margaret (now Lady) Thatcher, but 'for decades'. Ironically, public spending during Labour's first two terms is set to be lower (as a proportion of UK GDP) than 'for decades'.

The Treasury figures for UK public spending as a proportion of GDP are set out in the April 2003 Treasury Budget document for the years 1970/71 onwards. Under Ted Heath, public spending averaged 42.8% of GDP and this rose during the Wilson and Callaghan years to 47.7%. It fell back under Thatcher to 44.6% and fell back further under John Major to 42.8%.

Assuming Tony Blair’s second term runs its full course to 2005/06, then based on Treasury forecasts, public spending during his first nine years is set to have averaged 39.6% of GDP, a three-decades low in terms of public spending as a proportion of GDP under our last six prime ministers.

It should be noted that, even during Labour’s second term, when the public spending taps have apparently been well and truly turned on, public spending is set to average 40.6% of GDP.

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