Quite shocking really – or a cause for celebration, depending on your political bent. But pretty soon now, maybe in a year or so on current trajectories, the public sector will overtake the private sector in terms of economic output in Britain.
The first chart below, culled from the National Stats by a very helpful reader (Ed Bolton, Cambridge), re-sets peak GDP to 100 in the middle of last year, when the public/private ratio stood at 43/57.
After Friday’s dreadful Q1 stats the ratio stands at 43.4/52.5.
In fact, private sector output peaked in Q1 2008, since when it has fallen by 8 per cent to a level last seen in 2005. The public sector, meanwhile, has grown by 1.1 per cent over the past five quarters.
Lots of reasons for that – but eye-catching all the same, especially when the private sector shrinkage is annualised, as in the second chart below.
One other point: the data show the private sector growing at just 2.2 per cent since 1989. If Mr Darling is only going to increase public spending at 0.7 per cent per annum, overall growth of 3.5 per cent the year after next – as promised on Wednesday – really is in the realms of fantasy.
Related link:
Bolton’s spreadsheet – Long Room