The coming public spending freeze

Government spending will have to fall in real terms for the rest of this financial year if the Chancellor's forecasts are to be met.
Today's figures (pdf) show that central government current spending on items other than interest and welfare benefits has risen by 15.1% so far this financial year.
However, in his Pre-Budget statement (B29 of this pdf) Brown forecast that it would rise only 5.3% in this financial year.
To meet this forecast, spending in December-March will have to rise just 1.1% comapred to the same period last year.
As annual inflation in the public sector is running at almost 5% (based on the general government consumption deflator in Q2), this requires a hefty cut in real terms.
Which raises the question: to what extent is Brown really in control of public spending?

Comments

[Glenn Athey (angry economist)]

If you read the pre budget report, there's various expenditure caps and expected efficiency gains.

I think that GB has good control of public expenditure, but what he can't control is the tax take and overall macroeconomic performance.

The UK government and finances are so centralised, I think Gordon is in control of public expenditure. What he isn't in control of is tax receipts. This is significantly dependent on the performance of the UK economy. His expenditure plans and balanced budget forecasts are heavily dependent on his forecasts of macroeconomic performance and tax income. Many commentators reckon that his outlook for the UK economy is too optimistic, and his forecasts for tax income will not be met.

But they have been saying that for a while. What you have to remember is the HMT gets its hands on all the macroeconomic data much before anyone else does.

[Gabriel]

In fairness, spending and receipts are both lumpy through the year, so it's difficult to judge this sort of thing at this stage. The argument is they've brought forward a lot of grants to local authorities to earlier in the year. He's likely to rein the deficit back to some extent, and spending too probably, simply because of timing.