Ministers and the small-state right want us to think the cuts programme will mainly bear down on what they see as feather-bedded public servants, but the the state spends half as much again on buying good sand services from the private sector as it does on the public sector wage bill.
Just 25p in every tax pound is spent on public sector staff while 38p goes to the private sector.
All together the private sector gets £236 billion of custom from the private sector — equivalent to more than £4,000 a year for every UK adult according to HMT stats. Table 5.
Cuts in spending will inevitably hit the private sector.
The stats are:
Note: based on an entry on the TUC Touchstone blog
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Afternoon Richard,
Care to share a comment on the Record Trade deficit announced this morning?
Rather throws into doubt the hope of exporting our way out of this crisis.
Oh, and I see the OECD has cut worldwide growth forecasts.
Osborne looks increasingly exposed.
[…] Visit link: Tax Research UK » The Private sector will be hit by cuts […]
And of course even those proverbial feather-bedded public servants spend most of their salaries on private sector goods and services. Cutting spending at this point in the economic cycle is sheer lunacy.
@Marc Daniels Not to mention the considerable portion of their salaries that flows straight back to the exchequer via PAYE, VAT, Stamp Duty etc.
Watching all the vox-pops on the BBC news of late saddens me as I call see and hear is puppet-master Osborne saying “something’s definitely got to be done about the deficit, I mean we can’t go on spending more than we have.” How gullible we have all been.
Hi Richard
Perhaps this is a really obvious and I’m just being dim, but what happens to the remaining 37p in a pound? Does it go overseas?