Autumn Gloom In UK Statement

The UK’s Chancellor of the Exchequer gives a progress report on the state of the nation’s economy at this time of the year. It is known, appropriately enough as the autumn statement. The executive summary of the statement notes: “The UK economy is recovering from the most damaging financial crisis in generations, after a decade of growth built on unsustainable levels of debt. The Government inherited the largest deficit since the Second World War and the UK economy experienced one of the deepest recessions of any major economy. Across the world, recovery over the past three years has been slower than forecast.” As Bart Simpson may have said, “it was broken when I got here”.

Naturally, the government are sorting out the mess left by their predecessor (of course, Labour made the same claim when it came to power) and it will take time. The meat of the Chancellor’s statement is that (because of factors quite outside the government’s control, of course) it will take a year longer than predicted to get the UK deficit on a manageable footing. This means that the spending squeeze will continue for longer than anticipated. Austerity measures are to remain in place until 2017/18 with government departments expected to cut their spending by 1% next year and a further 2% in 2014. Local government budgets are set to be reduced by 2% in 2014.

The Chancellor has revised growth downwards from a prediction of 0.8% expansion for 2012 to a contraction of 0.1%. Next year, the economy should grow at 1.2% and the Chancellor’s crystal ball is predicting growth of 2, 2.3 and 2.7% from 2014 to 2017 respectively.

It is anticipated that the cost of spending by the government will shrink from 48% of GDP in 2009/10 to 39.5% by 2017/18. Of course, this will be after the next election and a new government may be blaming its woes on this one – in the time-honoured fashion.