The claim
“Fact of the day (because the BBC won’t tell you): UK spending cuts are currently smaller than €urozone average”
Tim Montgomerie, Conservative Home editor, on Twitter, May 23 2011
The background
With the megaphones of Madrid sounding in their ears, trade unions on the homefront are warming up for a Summer of Discontent.
But as they line up to attack the government, Tory stalwart John Redwood has stepped forward with a new sacrificial cow: the BBC.
“I think the BBC does consistently overdo the story of the cuts,” he said. “It is important for union negotiators to be aware of the true figures, and to see this is a time when co-operative working can save jobs and achieve more for the public.”
The editor of Conservative Home took Mr Redwood’s comment a step further, pointing out that cuts at home aren’t as bad as the average on the Continent. But how credible is Mr Montgomerie’s Fact of the Day?
The analysis
Strikes might be at an 80 year low, but the UK’s biggest trade union Unite is rallying behind others such as the civil servants’ union PCS to make the government “see sense”.
Postal workers called the government’s cuts “vicious” today, and backed calls for the TUC to co-ordinate a nationwide walkout against spending cuts.
All of this could see four million workers walk out – closing schools, benefits offices and Jobcentres, and bringing a host of public services to a halt.
But has the severity of the cuts been over-egged?
Across the UK, public spending is expected to fall 2.2 per cent between 2010 and 2012 to 48.8 per cent of Gross Domestic Product (GDP).
Yet, according to forecasts by the economics agency Centre for Economics and Business Research (CEBR) this sits below the European average of -2.4 per cent and on a par with the US, which will also see cuts of 2.2 per cent.
The UK will stay in the top 10 countries for government spend as a share of GDP; the CEBR concluded – based on projections from the OECD (Organisation for Economic Co-operation and Development) on 31 countries.
The CEBR’s report shows that cuts to public spending will be deeper in Germany, Hungary, Spain, Portugal, Slovenia, Slovak Republic, Iceland and Ireland over the next two years than in Britain.
However, the figures also show that it is Ireland’s massive 22.7 per cent drop in public spending over the two years that drags the European average down to -2.4 per cent.
Strip out Ireland and the average is -1.86 per cent of GDP (of European countries in the OECD).
(blog continues below graphic)
The verdict
Mr Redwood’s comment has shades of James Callaghan’s Winter of Discontent about it. “Rail, lorry, jobs chaos – and Jim blames the press”, the subheading on The Sun’s infamous “Crisis? What crisis?” story read.
Yet both he and Mr Montgomerie have a point; the CEBR’s research finds that we are not the worst off – a fact which the Beeb didn’t pick up on.
It does seem worth pointing out however that it’s a forecast based on the OECD’s figures which only run until 2012; and the UK’s Europe-beating record on cuts rests on the economic misery in Ireland.
Without Ireland pulling down the European average, the UK’s spending cuts would be running almost 0.5 per cent deeper than the European OECD average.
The forecast only runs until 2012. By the Institute for Fiscal Studies’ sums, the UK government’s six year plan to reduce borrowing will see public spending slide from 47.4 per cent in 2009-10 to 39.3 per cent by 2015-16.
“The period from April 2011 is set to be the tightest five-year period for public spending since at least the Second World War,” the IFS predicts. “The IMF (International Monetary Fund) forecasts that only Iceland and Ireland will deliver sharper falls in spending as a share of national income than the UK between 2010 and 2015.”
By Emma Thelwell
