Thursday, September 17, 2009
Those spending numbers
Posted by David Smith at 10:30 AM
Category: Thoughts and responses

A couple of quick points on the great spending row. First, it explains why Alistair Darling, who knew the numbers, was so uncomfortable with Gordon Brown's "Labour investment versus Tory cuts" line.

But second, these numbers are not yet set in stone. The Treasury's assumptions on social security payments and debt interest may be pessimistic, in some cases because it is required to use outside forecasts. That is also true of some of the assumptions underlying the tax projections. So, even if the official growth numbers look optimistic, the public finance projections are probably not and may err on the side of caution. Let's hope so anyway.

Third, quite a lot of the assumed cuts in departmental spending - more than a third - are from cuts in capital budgets, which is always what politicians looking to cut target first. A significant squeeze is also built in for current spending, however, which will also be necessary. The Institute for Fiscal Studies, as always, is good on this. Its report is here. Also worth looking at Vince Cable's deficit reduction programme, which has some sensible proposals. It is here.

Meanwhile, retail sales were flat in August, though 2.1% up on a year earlier. Not bad in the circumstances. Here's more from the ONS.