In place of a thousand words


This graph says a lot about Gordon Brown's management of the economy. Starting in 2000 (the last time we had a budget surplus) and continuing to the present financial year, it shows public sector net debt (purple), public spending (red), tax revenues (bliue), and the deficit (green) as percentages of GDP. The two big shifts were (1) after Labour's second election victory in 2001, when spending started to outstrip tax revenues and the budget deficit hovered around 4 percent, and (2) when the financial crisis struck and the country moved towards recession, with falling tax revenues, rising spending, and a ballooning deficit.

One interesting thing to note is that tax revenues have remained fairly constant as a percentage of GDP, averaging just under 36 percent over the last decade, within a range of 34-37 percent. It seems to follow that - even assuming government continues to do the things it currently does - it ought not to spend more than 36 percent of GDP. That's still too high for my tastes, but from where we're starting it would be a sensible target for an incoming government to aim for.