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The business cycle affects Tax Freedom Day in two ways. In an economic upturn, the economy grows strongly, meaning that a given sum of taxes is a smaller proportion of the whole. Hence, Tax Freedom Day moves earlier in the calendar. But it also means that tax revenues rise faster – more spending means more VAT, for instance, and higher corporate profits mean larger business tax revenues. This pushes Tax Freedom Day later in the calendar.

In a downturn the same forces work in the opposite direction. Weaker growth – or even a contracting economy – means that for any given sum of taxes, Tax Freedom Day falls later in the year. But lower tax revenue pushes it earlier. In each case, the outcome depends on the relative strength of the opposing forces.

In addition, public spending on social security (eg, unemployment benefit) rise by less in an upturn and by more in a downturn, adding to the volatility of Tax Freedom Day.

But what makes the situation worse for the UK is that we entered the recession with the public finances in a much worse state than they need have been. Over the period from 1997 to 2007, the UK economy grew strongly (an average of 2.9%, compared with a long-term sustainable growth rate of about 2.5%). Normally, this should have mean that the public finances improve. Yet under Gordon Brown’s stewardship of the economy, the underlying public finances went from a near balance in 2008 (a deficit of 0.1% of GDP) to a deficit of 3.1% in 2007. In Budget 2009, Alistair Darling forecast a deficit of 13.3% of GDP for the current fiscal year, with another 12.3% in 2010-11. Of course, the government would in any case have had to borrow large amounts to finance this year’s spending in the recession. But the borrowing – and the potential liability for future years – would have been much less had it not mishandled the public finances during previous years.

As a result, we end up with a peculiar situation where the difference between Tax Freedom Day based on actual tax revenues and Tax Freedom Day based on government spending is the widest since the early 1960s – and probably since World War II. Tax Freedom Day based on actual forecast tax revenues will be on 14th May – the earliest day since 1973. But including the government deficit, it will be 25th June – the latest date since 1984.