Tuesday, May 24, 2011

Those Dreadful Tory Cuts

"Spending in April was 5 per cent higher than a year ago at £54.1 billion. This was mainly caused by a 26 per cent rise in interest payments to £1 billion as the Government services its growing debts and interest rates rise along with inflation.

The Government's deficit reduction plans were dealt a blow today after official figures revealed that last month's borrowing figures were the highest ever recorded for the month of April.

Public borrowing, excluding financial interventions such as bank bail-outs, hit £10 billion, compared with £7.3 billion the previous year, said the Office for National Statistics (ONS)."

I don't understand. Gilt rates don't seem to have risen - where's this extra 5% spending coming from ? And anyway, 'Daily Mail Reporter' can't do maths - if interest payments rose 26% to £1bn that means they rose by £206 million. If spending rose by 5% to £54.1bn then it was £51.5bn a year ago - a rise of £2.6bn, of which less than 10% is attributable to increased interest payments.

So where's the extra spending going ?

Daily Mail really are no good. Page 4 of this pdf shows :

Central government account
April Financial year
2011 2010 2010 /11

Current expenditure
Interest 4.6 3.6 43.2
Net social benefits 14.7 14.0 173.2
Other curr expndture 34.8 34.0 387.1
Total curr expndture 54.1 51.5 603.5

So interest is £1bn more, social benefits £0.7bn more, other £0.8bn more, total £2.5bn extra of which 40% is down to increased interest - presumably not because of increased rates but because of increased gilt issuance.

You expect most journalists, as Arts grads, to be functionally innumerate. But they could have found someone who could add up for this story.

(sorry the formatting's no good. And H/T Brian for the pdf)


Brian said...

See page 4 of this ONS Bulletin for April 2011. Interest, social benefits and "other spending" has increased compared with 2010 due to increased borrowing, inflation and increased unemployment.

Anonymous said...

Real cuts will come.

From wiki.
"Economic historians usually attribute the start of the Great Depression to the sudden devastating collapse of US stock market prices on October 29, 1929, known as Black Tuesday. However, some dispute this conclusion, and see the stock crash as a symptom, rather than a cause, of the Great Depression. Even after the Wall Street Crash of 1929, optimism persisted for some time;"

"In fact, the stock market turned upward in early 1930, returning to early 1929 levels by April."

"Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year."

uh oh......... uh oh!!

"By mid-1930, interest rates had dropped to low levels."

"By late 1930, a steady decline in the world economy had set, which did not reach bottom until 1933."

History is repeating itself, only its going to be worse.

Mark said...

'Other' current expenditure was up £800 million in April from last year- I would guess that approaching 20% of that was attributable to the costs incurred by the Libyan bombing campaign.