Pre-Budget Outlook

By William Peters

UK Government net borrowing

This chart shows UK Government net borrowing tracked against net borrowing as a percentage of GDP. As the UK Government approaches the Spring Budget, its net borrowing position remains a focal point, balancing between economic recovery efforts and maintaining fiscal responsibility. The government faces the challenge of supporting public services and stimulating economic growth while managing the national debt and responding to external economic pressures.?

G10 tax revenue as percentage of GDP

Compared to its global peers in the G10, the UK has the eighth highest tax burden, according to data from the OECD. France’s leading position reflects its extensive public sector and social welfare programmes, which are partly funded by higher taxation, followed closely by Norway and Italy as a function of their comprehensive social services and public pensions. The UK’s middle-ranking position highlights the balance the Government attempts to strike between funding public services and maintaining a competitive tax regime. The US and Switzerland’s positions reflect their attempts to create a business-friendly environment while tightly controlling public spending.??

UK Government expenditure contribution to GDP growth

The UK Government's expenditure plays a crucial role in fuelling GDP growth, serving both as a direct injection into the economy and as a catalyst for private sector activity. Through investments in public services, infrastructure, and targeted support for businesses, government spending aims to stimulate economic recovery and resilience.

This chart shows how the stable picture of government spending contribution to GDP was temporarily distorted by the Covid-19 pandemic. This led to a spike in 2020 followed by a sharp drop reflecting a reduction in expenditure as the economy started to recover, before reverting to the previous trend.?

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