I'm in a good mood today. So I'm going to give the Stupid Party a little gift - the chart below. It shows that the ratio of state spending to business investment has hit its highest level since records began over 40 years ago. Figures released yesterday (pdf) and today (pdf) show that in the last 12 months the government has spent £2.30 on goods and services* for every £1 firms have spent on capital equipment.
The Stupid Party can claim that this shows that Gordon Brown is frittering away the nation's income on bureaucrats whilst we're not investing for the future.
But is this true? The figures in the chart measure spending in current prices. Volume measures show a very different picture. Measured in volume terms, the ratio of government to capital spending is near a record low.
There's a simple reason for this difference - prices. Prices of capital goods have fallen by 9% since New Labour took office in 1997, thanks to lower technology prices. As a result, a given level of investment buys a greater volume of goods. However, during the same time, prices of government goods and services have risen 47.1%, so a given nominal level of spending doesn't go so far.
Falling capital goods prices are obviously a good thing. What's not so good is that Baumol's cost disease is causing the relative cost of government to steadily rise.
* The figures refer to government consumption, which excludes transfer payments and government infrastructure spending. 
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