How is Austerity Coming Along?

Generali

The latest budget stats for September 2011 have just been released here (opens in Excel). I thought it would be interesting to see how the economy is getting on in reality compared to what Ed Balls etc say is necessarily bound to happen as a result of fiscal tightening, that is to say that revenues will fall and spending will rise.

In real terms (RPI adjusted to Sept 2011 Pounds - RPI = 5.6%):
Total Revenues
Jan-Sept 2010: £403,668,700,000
Jan-Sept 2011: £403,010,000,000

Total Borrowing
Jan-Sept 2010: £107,419,500,000
Jan-Sept 2011: £85,375,000,000

Implied Total Spending (=Revenues+Borrowing+Interest):
Jan-Sept 2010: £511,088,200,000
Jan-Sept 2011: £488,385,000,000

In Nominal Terms:
Total Revenues
Jan-Sept 2010: £382,262,000,000
Jan-Sept 2011: £403,010,000,000

Total Borrowing
Jan-Sept 2010: £101,723,000,000
Jan-Sept 2011: £85,375,000,000

Implied Total Spending (=Revenues+Borrowing+Interest):
Jan-Sept 2010: £483,985,000,000
Jan-Sept 2011: £488,385,000,000

In real terms, borrowing and spending are both down by about £22,000,000,000 with revenues roughly flat. So far so good!

michaels

Interesting that with high RPI driving benefit increases and low wage increases there is much less evidence of fiscal drag than you might expect. (I'm not sure how the bankers bonus tax/50% tax rate changes impact in the revenue figures tho?)

Generali

michaels wrote: »

(I'm not sure how the bankers bonus tax/50% tax rate changes impact in the revenue figures tho?)

The VAT take for YTD 2011 compared with the same period in 2010 is up from £74,027,000,000 to £82,650,000,000 in real terms as above (nominal figure was £70,101,000,000 for 2010).

Tax on income was down a little more than £3,000,000,000 (about 2%) in real terms when comparing the 2 periods.

Masomnia

Generali wrote: »

The VAT take for YTD 2011 compared with the same period in 2010 is up from £74,027,000,000 to £82,650,000,000 in real terms as above (nominal figure was £70,101,000,000 for 2010).

Tax on income was down a little more than £3,000,000,000 (about 2%) in real terms when comparing the 2 periods.

I guess that's mainly down to the personal allowance increase.

I'm naturally optimistic, so I didn't think it would be as bad as Balls claimed it would be, but I have to say even I was pleasantly surprised by the figures. With the cuts being front-loaded as well if we stay on track for another six months or so, I reckon we'll be over the major hurdle.

michaels

On the expenditure side, re3dundancy for govt employees is expensive so does this mean that actual reductions in recurring expenditure may be more than the figures suggest?

I can't help feeling thatthose on benefits should be sharing some of the pain though - those in employment are clearly worse off in real terms so wouldn't it be fair if those on benefits also saw a real terms reduction?

Road_Hog

Generali wrote: »

The VAT take for YTD 2011 compared with the same period in 2010 is up from £74,027,000,000 to £82,650,000,000 in real terms as above (nominal figure was £70,101,000,000 for 2010).

VAT rates for those periods were different, so apples and oranges.

vivatifosi

michaels wrote: »

On the expenditure side, getting rid of govt employees is expensive so does this mean that actual reductions in recurring expenditure may be more than the figures suggest?

Can't give specifics for obvious reasons, but that's my understanding. I guess it depends on departments and expenditures though. If you can stop a planned capital expense then clearly that'll show before headcount reduction with redundancy cost. I would imagine that the nature of government will give very different results across different parts. Plus of course with capital spend you could have penalty clauses before you actually start saving money. From what I can see the numbers are a very pleasant surprise.

Generali

Road_Hog wrote: »

VAT rates for those periods were different, so apples and oranges.

They were but VAT is VAT. I'm hardly comparing VAT last year to death duties this year!

Most taxes change over time. Income tax brackets change, and underlying incomes change. Income tax is comparable over time.

The point is that the VAT rate increased and the VAT take increased. I'd say that was a pretty strong performance as VAT went up by 2.5 percentage points or 14% and the VAT take went up by 11%. That's not bad in the circumstances.

If you think you can do a better analysis have a go. It's easy to carp about the figures but I don't see you putting up an argument, just knocking mine.

2/10 must try harder :0)

Road_Hog

Generali wrote: »

If you think you can do a better analysis have a go. It's easy to carp about the figures but I don't see you putting up an argument, just knocking mine.

2/10 must try harder :0)

Stop crying like a baby. If you're going to give analysis, then you should make a point of noting significant changes that can skew the figures.

My post was a general one, for everyone to read.

Generali

vivatifosi wrote: »

Can't give specifics for obvious reasons, but that's my understanding. I guess it depends on departments and expenditures though. If you can stop a planned capital expense then clearly that'll show before headcount reduction with redundancy cost. I would imagine that the nature of government will give very different results across different parts. Plus of course with capital spend you could have penalty clauses before you actually start saving money. From what I can see the numbers are a very pleasant surprise.

I think the numbers are looking pretty good in the circumstances. You need also to remember that interest payments have gone up from £27,023,000,000 (£28,536,300,000 in real terms) to £36,312,000,000. That is also included in the expenditure numbers. Excluding interest real spending is down by almost £30,000,000,000.

Generali

Road_Hog wrote: »

Stop crying like a baby. If you're going to give analysis, then you should make a point of noting significant changes that can skew the figures.

My post was a general one, for everyone to read.

I don't think I am comparing 'apples with oranges' and nor did the ONS when they put together the figures as they specifically compare the numbers as they are part of the same series (NZGF). If figures for any statistic change to make them incomparable then the ONS starts a new series, discontinuing the old one.

Please save the ad hominem stuff. Anyone can be a keyboard ninja. If you want to discuss the figures then that's great. If you want to swap cheap insults then I can't be bothered. Life's too short to swap insults on the internet with strangers.