Is the government getting the deficit down?

“We’ve got the deficit down”

 Karen Bradley, 28 September 2017

The deficit has fallen from 10% of UK GDP in 2009/10, just before the Coalition government came to power, to 2.3% in 2016/17. That’s a fall from £170 billion in 2009/10 to £45 billion in 2016/17 (accounting for inflation). The reduction is well below the Conservatives’ original plan of reaching a surplus by 2015.

What is the deficit?

We’re using the public sector net borrowing measure of the deficit. This is the difference between the government’s income (from things like taxes and investments) and everything it spends on public services, investment, and debt interest. It’s different to the national debt, which is the total amount the government owes to other institutions.

The deficit can be calculated in cash terms, or as a percentage of GDP, which tells us the size of the deficit in relation to the value of the economy as a whole in that year.

It’s down, but it’s taking a lot longer than the Conservatives initially planned

So why does Karen Bradley make a point of this?

Cutting the deficit—and achieving a surplus—has been a pledge for this Conservative government and the previous Coalition government. And although it has been cut it since 2010, the Conservatives have not met all of their targets.

The government set deficit targets in 2010 (which it didn’t meet) and in 2015 (which it abandoned).

In 2015 the government updated its plans, aiming to have a surplus on public sector net borrowing by 2019/20.

The government isn’t forecasted to achieve this within the next five years, and new targets were set by the Chancellor last autumn, which are “presumed” to be for 2024-25.

So the deficit has been coming down, but not as rapidly as the Coalition and the Conservatives had said in 2010 and 2015.