The Policy Exchange has advised the next government that it must be prepared to make radical and immediate cuts to spending plans or face a serious risk of a full-scale sovereign debt crisis. In a new paper, it has also shown that only a third of the impending surge in government spending can be traced back to measures intended to combat the recession, with the rest going on increased budgets for ballooning government departments.
Government spending is growing far more quickly than in other countries, and faster than in previous recessions, think tank Policy Exchange today warns. A new report finds that the surge in spending is not being driven by the recession.
At most, 6% of the increased spending is going on public works, and just over a third is due to the rising cost of social security or debt. Instead of “investment”, most of the increase is due to a decision to spend more on consumption.
“A decision to spend more on consumption” — that is, borrowing to fund present expenditure: plainly unsustainable.