Chart of the Week

Friday
Mar252011

Week 13, 2011: UK Govt Income & Expenditure

Summary: The UK government budget was announced last week, so we've taken a look at how the shape of government income and expenditure has changed over the past 45 years.

What does the chart show? The blue line shows UK public sector receipts per capita. Almost all of the income of the public sector is through taxation, so it essentially shows the average amount of tax paid by every person in the UK, including those that don't pay taxes directly (for example, children). The red line shows "Total Managed Expenditure", again per capita. This captures both current and investment spending by the public sector. Both are expressed in 2009-2010 prices.

Why is the chart interesting? This chart shows a number of things. Firstly, both income and expenditure per person have more than doubled over the past 45 years. This has been a continual process, but has accelerated in the 21st century. Secondly, it shows that it has been incredibly rare over the period for income to exceed expenditure; there were only three short periods where this was the case (1969-71, 1988-90, and 1998-2002). For most of the time over the course of the past 45 years, we have each been receiving more on average than we pay in, with the difference made up from borrowing.

Finally, it shows that the widest gap between the two over the period has opened up since the recession; this is partly to do with increasing public spending, but mainly due to a sudden drop in government revenues as people pay less in taxes.

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