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Tuesday, 2nd June, 2009

Public Spending in the 2010s: Apply the brakes or go into reverse?

Health spending continued to grow in the two key periods of public spending restraint in the twentieth century, but the latest forecasts suggest that such a pattern will be hard to repeat over the coming years as UK governments struggle to reduce the deficit and that real cuts in other major programmes are inevitable.

This is the key finding of a policy briefing launched on the 1st of June 2009 by the ESRC Public Services Programme and the Institute for Fiscal Studies. Programme Director Christopher Hood presented the policy briefing at the new Institute for Government, attracting a lot of discussion.

Attempts to brake or reverse the growth of public spending in the UK are not new. So what can be learnt from earlier periods of restraint or cutback in public spending? This policy briefing reviews two key historical cases – the ‘Geddes Axe’ era of the 1920s, and the 1975-85 period which included a loan from the IMF, the price of which was immediate spending cuts and tax increase – and also analyses public spending in relation to the economic cycle in the last 60 years.

It finds:

The full text of the policy briefing is available here (PDF).