Today we updated our @theifs.bsky.social spending tool with 2024-25 data! Do have a play around with it if you're having a quiet Friday afternoon - it lets you produce some nice breakdowns of different types of spending, across different areas and over time: ifs.org.uk/calculators/...
NEW PODCAST: The Spring Forecast explained
@helenmiller.bsky.social, @benzaranko.bsky.social and @beeboileau.bsky.social discuss the Spring Forecast. We cover rising energy prices and what the big forecast uncertainties mean for government spending plans.
🎧 Listen here: ifs.org.uk/articles/spr...
This is just one scenario but it shows the importance of the potential pressure from defence. A laundry list of other pressures over the next SR period too, from the risk SEND reform doesn't reduce spending growth by as much as expected, to high public sector pay settlements...
Spending could be topped up through raising taxes or borrowing (though unlikely to be sustainable to borrow for a long-term increase). If instead higher defence spending were funded within existing totals, in this scenario it would take up all real-terms growth over the SR period
One clear pressure on spending is from defence - even before recent events the PM indicated he would like to go faster here. E.g. if the govt chose to raise defence spending to 3.0% of GDP by 2030, this would increase spending by £14bn per year vs. plans to spend 2.6% of GDP.
(Sidenote: this is an average - worth noting how weird the profile looks. Growth much slower in 2029-30, perhaps coincidentally the year the fiscal rules currently bind, before speeding up again thereafter...)
The Spring Forecast confirmed that the Spending Review next year looks tough. Plans are currently for departmental spending to grow by just 0.9% per year on average in real terms in the next Spending Review period, much slower than planned for the first part of the parliament.
I had a great time chatting about older people with
@timharford.ft.com on BBC4 More or Less. The starting question was – are one in four pensioners really millionaires? Quick thread below: www.bbc.co.uk/sounds/play/...
Further to this, in a (plausible) scenario presented by the OBR, official plans imply that "unprotected" departments would face cuts of >3% per year, equivalent to more than £20 billion, between 2029 and 2031. That includes police, courts, job centres, colleges, prisons, HMRC, border force... 🤔
The OBR warned about a set of other pressures too - asylum accommodation costs, NHS drug prices and strikes - which risk the deliverability of spending settlements. The 2027 Spending Review looks ever-harder, and spending plans from 2028-29 somewhat less credible...
On top of these, departments must now absorb approx £6bn of SEND spending pressure in 28-29 - HMT haven't yet specified how this will be done but will be a very tough job to allocate these pressures. Makes it much more likely totals will be topped up down the line
Underrated part of yesterday's Budget was what's happening to public service spending in 2028-29. Spending Review settlements reopened just 5 months after the SR to account for loosely-specified 'efficiency savings' of £1.4bn in 28-29 (rising to 4bn in 29-30)
We've written an explainer going through some of the options available to the Chancellor on departmental spending at next week's Budget:
We also see growing disparities in women's physical health by wealth over the last two decades, with the least-wealthy third of women not seeing improvements in mobility.
In contrast, there have been improvements in men's physical health across the wealth distribution.
We have a new report out on health & employment in people's late 50s and early 60s. One key finding is these widening gaps in the share of women experiencing depressive symptoms by wealth - likely to be an important headwind for a government looking to boost employment rates.
NEW PODCAST: The end of the peace dividend? UK defence in a changing world
🎧 @helenmiller.bsky.social, @maxwarner.bsky.social & @rusi.bsky.social's Matthew Savill chat all things defence spending: what it covers, how it's changed and what reaching 3.5% of GDP would mean: ifs.org.uk/articles/end...
Much more detail on defence in our new report, in which we explore the past and future of defence spending - in the UK and elsewhere - and discuss the links between spending and capabilities, as well as between defence spending and growth: ifs.org.uk/publications...
In new @theifs.bsky.social work, we examine the fiscal challenge of the UK's commitment to higher defence spending. If met, for the first time in a long time health and defence spending would likely rise simultaneously (as a % of GDP). This would change the shape and/or size of the state.
Some great charts in this report. This one is my favourite. The UK has signed up the new NATO commitment to spend 3.5% of GDP on defence. The scale of the increase is fiscally challenging, and we've given ourselves a decade. Poland, on the other hand, has done it in just two years.
NEW: A response to government commitment to spend 5% of GDP on national security
@beeboileau.bsky.social and @maxwarner.bsky.social set out what this could mean for government spending and future fiscal events: ifs.org.uk/articles/res...
Wrote pre-SR in the @observeruk.bsky.social about the pressures on defence spending & the risk that existing plans - which were confirmed at the SR - will need to be topped up in future: observer.co.uk/news/busines...
The govt's allocation of additional investment over this parliament is a good guide to its overall priorities - we're seeing big increases to defence and net zero, with less for more primarily growth-friendly areas (incl a real-terms cut to transport capital over the parliament)
🚨 OUT NOW 🚨 How do spending reviews work?
💷 Tory MP John Glen, former minister Brandon Lewis, former special adviser Sonia Khan and economists @tompope.bsky.social & @beeboileau.bsky.social join @alaintolhurst.bsky.social to look behind the Treasury's spending plans
🎧 Listen here: pod.fo/e/2e0742
NEW: Four big decisions for the 2025 Spending Review
@beeboileau.bsky.social, @maxwarner.bsky.social and @benzaranko.bsky.social explain why tough choices will be unavoidable at the upcoming Spending Review in our new briefing:
Lots of discussion today about regional investment. You can use our @theifs.bsky.social public spending tool to explore how much the government currently spends in each region of the UK, what it spends it on, and how that has changed over time: ifs.org.uk/calculators/...
EVENT: A look ahead to the 2025 Spending Review
Join us at 11am on Monday 2 June for analysis of the key choices at next month's Spending Review, with speakers @beeboileau.bsky.social and @instituteforgovernment.org.uk's @stuarthoddinott.bsky.social.
Sign up here: ifs.org.uk/events/look-...
Rather than doom-scrolling/trying to desperately learn what a ‘Treasury basis trade’ is, why not play with our new tool instead?
Allows you to see, in lots of detail, how much the government spends on different things in each region (£, £ per person, % GDP). I’ll post some nice examples later.
Not planning to combine the two (at least currently!!) but there is an update of the 'be the chancellor' tool coming - watch this space. Should be out pre-Spending Review
We've written a comment alongside the tool, here: ifs.org.uk/articles/exp.... This gives another example of how you can use the tool, pulling out the strong regional differences in spending. And Max goes over some more examples here: bsky.app/profile/maxw...
