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We disagree, significantly, with the IFS here

Summary:
UK total managed expenditure is, in total real terms, higher than it has ever been. Per capita it’s just a shade off that peak. As a percentage of GDP it is about where it was when Gordon Brown became Prime Minister - yes, higher than during his spending spree as Chancellor - and higher than at any time between 1985 and 2008.This is described as:In addition, the Spending Review will come on the back of the longest sustained squeeze in public spending on record, with pressure for austerity to be brought to a decisive end.We simply do not, cannot, describe this as austerity. Public spending as a portion of everything we have - GDP - is well above long term average. That’s not being austere with our money and taxes. We rather think “spendthrift” is the word that comes to mind.To describe it

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UK total managed expenditure is, in total real terms, higher than it has ever been. Per capita it’s just a shade off that peak. As a percentage of GDP it is about where it was when Gordon Brown became Prime Minister - yes, higher than during his spending spree as Chancellor - and higher than at any time between 1985 and 2008.

This is described as:

In addition, the Spending Review will come on the back of the longest sustained squeeze in public spending on record, with pressure for austerity to be brought to a decisive end.

We simply do not, cannot, describe this as austerity. Public spending as a portion of everything we have - GDP - is well above long term average. That’s not being austere with our money and taxes. We rather think “spendthrift” is the word that comes to mind.

To describe it otherwise is to fall foul of the Keynesian ratchet. We’re not sure we do agree with blowing out the budget in a recession but let’s assume this is the correct policy. That blowing out is justified by the recession, once normality is re-achieved then the spending should decline again to the more normal to GDP ratio. Except that’s not what does happen, every attempt to re-achieve that normality is derided as cuts - as austerity. Which acts as that ratchet, every recessionary increase becomes the new baseline from which the future is then judged.

If as and when that total managed spend is around the 35% of GDP that it was in the late 1980s, or late 1990s, and then there is still talk of cutting further then yes, we’ll agree that that is austerity. We’ll almost certainly still argue for it too. But while government is still disposing of some £100 billion more than that it simply ain’t austerity, quite the opposite.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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