Eurostat figures provide context for scale of UK borrowing

A new release from Eurostat shows the scale of Britain's borrowing compared to the rest of Europe.  There are provisos on the figures from Greece, but the big picture is that in 2009 we had the highest deficit of any country not already taking sharp measures to cut spending (Ireland) or being bailed out by the IMF and other European countries (Greece).

EU27 government deficits/surpluses, % of GDP, 2009


The hope has to be that strong growth will cut the deficit sharply, and limit the work that needs to be done by spending cuts and/or tax rises.  But that isn't likely with spending as high as it is.  A wealth of academic evidence suggests that high spending countries tend to see lower growth, researchers at the European Central Bank found that for each 1 percentage point rise in spending as a proportion of GDP, growth fell by 0.136 percentage points.  The Eurostat release also records government spending and shows that Britain is comfortably in the top half, having left countries like Germany well behind.

Spending cuts are needed to shift Britain into a healthier position on both those graphs.  Cuts will improve our fiscal position and make room for the private sector to grow.

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